- The Washington Times - Friday, March 16, 2007

TRENTON, N.J. (AP) — After Jon broke up with Carla, he forgave a half-million-dollar mortgage loan he had made to her. He also may have paid her children’s tuition and helped her with other expenses.

All of this might have been merely a story about a boyfriend and girlfriend who broke up and managed to stay friends, except that Jon is Gov. Jon Corzine and Carla is Carla Katz, president of New Jersey’s biggest state-employee union. And the two have been on opposite sides lately during contract talks covering 40,000 workers.

In recent weeks, their romantic and financial ties have raised conflict-of-interest questions, namely: Are Mr. Corzine and Mrs. Katz faithfully serving the people they represent? Or are they hopelessly compromised?

The Republicans have called on the Democratic governor to seek a state ethics panel ruling on his financial dealings with his ex-girlfriend. The furor has also led to demands for more of an explanation than Mr. Corzine has been willing to give.

“Of course the public has a right to know about their past or present relationship,” said conservative Republican state Assemblyman Richard Merkt. “These two people play a key role in how billions of public dollars get spent.”

Mr. Corzine’s decision to forgive a $470,000 mortgage loan to Mrs. Katz became public during his 2005 campaign for governor and stirred controversy at the time. But the conflict-of-interest questions became stronger recently when it was learned that three months ago Mrs. Katz bought a luxury condominium for $1.1 million in the same waterfront Hoboken building where Mr. Corzine lives.

At the same time, she was completing more than $500,000 in renovations to the country home he helped her buy.

Among the questions raised: Did he help her buy the condo? Has he given her other financial assistance since the breakup of their two-year relationship in 2004?

Mrs. Katz, 47, who is paid $102,000 a year as leader of a Communications Workers of America local, has refused to discuss her finances.

Mr. Corzine, a former Goldman Sachs chief executive who made hundreds of millions of dollars on Wall Street, has repeatedly said he no longer has any financial ties to Mrs. Katz. But he has never entirely explained why he was so generous with her, and has bristled at questions about their financial dealings. Both are divorced.

“Personal is personal,” said the 60-year-old governor, who campaigned on a theme of openness and integrity in a state with a history of political corruption. “You can ask until you get tired of asking.”

In a cagey interview with the Star-Ledger of Newark, Mr. Corzine suggested he may have paid the tuition for Mrs. Katz’s two children, who attend a $22,000-a-year private school.

“If you were — I’m hypothesizing; I’m not stating anything — if you were going to pay a tuition bill or something over a period of time … you prefunded it,” Mr. Corzine said. “I could have done that.”

The contract with the CWA will be voted on by the rank-and-file this month. Mr. Corzine approved the deal, which forces health and pension concessions from workers. Mrs. Katz has vocally opposed it.

“New Jersey taxpayers have a right to be concerned,” said Patrick J. Cihon, associate professor of law and public policy at Syracuse University. “Is the governor acting in the best interest of the taxpayers when it comes to striking a deal with the union? Giving that kind of financial benefit to another person clearly raises a question about the impartiality of the relationship.”

Tom Shea, Mr. Corzine’s chief of staff, said it is preposterous to think the governor did not put the taxpayers’ interests first. “This is the best contract for the taxpayers in years,” Mr. Shea said. “The evidence shows they both did their jobs.”

Mrs. Katz, for her part, said: “I have always been — and I continue to be — a tough negotiator and a strong advocate on behalf of my members, regardless of who the governor is.”

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