Expensive Gift to New Jersey CWA Boss Raises Ethics Questions

The soap opera that is latter-day New Jersey politics has a new episode. This time the central characters are a U.S. Senator who wants to be the state’s next governor, a divorcee who represents the state’s largest collective-bargaining unit for state employees, and, from a distance, her ex-husband. Nobody has broken the law – so far as one knows. And it’s a private matter, involving no union funds. But many observers are worried that a major conflict of interest is in the making unless the candidate is more forthright with the facts.

There’s no disputing that the New Jersey’s governor’s race took a bizarre turn on August 5. The New York Times and the Newark Star-Ledger each revealed, through obtained court documents, that Sen. Jon Corzine, D-N.J., over two and a half years ago had written a large check to a girlfriend to help with her divorce settlement. On the surface it was a gesture of friendship and nothing more. It’s hardly front-page news that Corzine, 58, formerly CEO of Goldman, Sachs, is a rich man, having amassed a net worth of more than $250 million before entering politics. But what’s unusual about this case is the position of the woman he helped. That would be Carla Katz, 46, head of the Trenton-based Communications Workers of America Local 1034, which represents about 9,000 New Jersey state employees, not to mention a sizable number of private-sector employees.

Records show that on December 18, 2002 Corzine loaned $470,000 to Katz through a company he controlled, enabling her to buy her Bloomsbury, N.J. home from her estranged husband. The two were known to be romantically involved at the time, having met in 1999, when he was opening his eventually successful U.S. Senate campaign. In 2003 Corzine was awarded a divorce of his own. But by the summer of 2004 the romance was over. Last December 9, a week after launching his gubernatorial campaign, he converted the loan into a gift. Corzine says he paid the federal gift tax on the property transfer. Based on $470,000, the tax would be $145,600, noted the Tax Foundation, a Washington, D.C.-based nonprofit group.

Aside from the fact that neither the home nor the tax on it are small change, it doesn’t take a genius to realize the potential for conflict of interest. If Corzine is elected this November, he and Katz will find themselves on opposite sides of the bargaining table. And Katz, along with other New Jersey employees’ union officials, is openly seeking billions of dollars in (taxpayer-funded) pay hikes. “I don’t think there’s a conflict,” assured Corzine. “The relationship has ended.” New Jersey Republican Chairman Tom Wilson thinks otherwise. “She (Katz) is not somebody who owns a widget company in Secaucus,” he noted. “She’s the president of the largest bargaining unit for state employees.” It’s not just the GOP leadership who has concerns over Corzine. Larry Noble of the nonprofit Washington research group, the Center for Responsive Politics, puts it this way: “As a political matter…I think he has to answer whether there is an ongoing financial relationship. The voters are going to want to know.” Interestingly, Corzine and Katz live in the same Hoboken apartment building, though not in the same apartment.

Corzine, elected to the U.S. Senate in 2000, announced last December he would run for governor. The decision came four months after the sudden resignation of Gov. Jim McGreevey, also a Democrat, who had admitted to a homosexual affair years earlier with the person whom he named as his top adviser on homeland security. The adviser, an Israeli national named Golan Cipel, had been threatening to blackmail McGreevey over the affair, thus prompting the latter’s announcement. In New Jersey politics, there is rarely a dull moment. (New York Post, 8/5, 8/6; Washington Post, 8/5).