TRENTON, Aug. 3 - Senator Jon S. Corzine provided a $470,000 mortgage to the president of a union that represents thousands of New Jersey state employees in late 2002, then forgave the debt two years later.
The union president, Carla Katz, was Mr. Corzine's girlfriend at the time. The senator said on Wednesday that an investment company he owns gave her the mortgage, then canceled it in December 2004, several months after they had stopped dating.
The loan was not illegal, and Mr. Corzine said he took care of the required gift tax on the money he ended up giving to Ms. Katz.
But if Mr. Corzine succeeds in his race for New Jersey governor this fall against the Republican candidate, Douglas R. Forrester, he could find himself negotiating opposite Ms. Katz, whose union, Local 1034 of the Communications Workers of America, represents 9,000 state workers and is one of a handful of labor groups that will seek billions of dollars from the state for wage increases and a bailout of the state's troubled health care and pension funds.
In separate interviews on Wednesday, Mr. Corzine and Ms. Katz said they were confident that their financial dealings would not compromise their ability to represent their constituents in those negotiations.
The mortgage was found among publicly filed documents and land records by a reporter for The New York Times who was researching Mr. Corzine's finances.
Asked about the mortgage on Wednesday, Mr. Corzine, a millionaire who is financing his own campaign, characterized it as a gift intended to help a friend beset by money problems. The senator said he did not consider the possibility that his financial dealings with Ms. Katz might one day create the appearance of a conflict of interest because, at the time, he viewed their relationship in purely personal terms.
"I'm a public official, but I also have a private life," he said. "I had a serious relationship with Carla that ended, but certainly at the time when that mortgage was let, it was serious and at the time I thought I had the possibility of being in a long-term relationship."
Mr. Corzine declined to say whether he had given Ms. Katz or members of her family any other financial help, saying that "some things are personal."
Ms. Katz also declined to discuss what financial help may have been extended by Mr. Corzine.
"What happened inside my relationship with Jon is personal," she said during an interview Wednesday. "Whether he gave me a box of chocolates or a nice necklace, my personal finances are personal. Private."
Ms. Katz, who has worked for the union since 1982, has been a familiar presence in the State House for years, and a key figure in lobbying for an assortment of benefits packages for public employees, including a 9 percent increase in pension benefits that was approved in 2001. In recent months, as state officials have warned that the spiraling cost of public employee pensions and health care poses a threat to New Jersey's fiscal future, Ms. Katz has also helped lead union protests warning legislators not to cut benefits for workers or retirees.
"I have more than zealously represented my members for years," Ms. Katz said, "and I'm going to continue to zealously represent them whether the next governor is Jon Corzine or Doug Forrester."
Mr. Corzine was also adamant in asserting that his personal and financial relationship with Ms. Katz would not deter him from bargaining aggressively on behalf of taxpayers. He said his record as senator offered a vivid example of his loyalty to his constituents.
"After working for 25 years at Goldman Sachs, the first thing I did when I became a senator was to help write the corporate reform bill," he said. "I only ask the public to remember that Jon Corzine represented their interests versus the financial services industry when he went to Washington."
The mortgage deal between Senator Corzine and Ms. Katz is one facet of an unusual political relationship that has been percolating just beneath the surface of this year's campaign for New Jersey governor.
Mr. Corzine and Ms. Katz first began appearing at social events as a couple in 2002, the year Mr. Corzine separated from his wife of 33 years.
At Local 1034's endorsement ceremony in Atlantic City on June 27 this year, when Ms. Katz introduced Mr. Corzine and gave him a peck on the cheek as he took the podium, their joint appearance caused such a stir that the senator's campaign was forced to acknowledge that there had been a relationship.
When Mr. Corzine's divorce was finalized in November 2003, both he and his wife, Joanne, released written statements saying that the decision to end the marriage was his. He has declined to say when his relationship with Ms. Katz began.
Land records at the Hunterdon County clerk's office show that on Dec. 18, 2002, Ms. Katz was granted a $470,000 mortgage from JSC Investments L.L.C., a company owned solely by Mr. Corzine. A deed filed in the clerk's office indicates that Ms. Katz used $361,000 of the loan to buy her husband's share of their home in Bloomsbury, N.J. Ms. Katz and her husband, Larry McKim, later divorced.
Then on Dec. 9, 2004 - one week after Mr. Corzine formally began his candidacy for governor - the mortgage was canceled.
Mr. Corzine said the timing of the mortgage cancellation was coincidental. After a busy year spent in the Senate and preparing to run for governor, he said, he did not pay close attention to his financial matters until mid-November. As he reviewed his finances, he said, he decided to forgive the loan because Ms. Katz was facing significant financial pressure.
"I didn't want to leave her with a difficult financial burden," he said. "I had the ability to help her, so I did."
Both Mr. Corzine and Ms. Katz said that the money had nothing to do with the union's endorsement of his campaign and that it was given with absolutely no stipulations or promises
"Zero," said Mr. Corzine, who has enjoyed wide support among union leaders in New Jersey and in Washington since his election to the Senate in 2000.
Mr. Corzine said he did not think their financial dealings would present even the appearance of a conflict of interest because Ms. Katz is one of several major union leaders who negotiate with legislators and members of the state administration. Her union represents more than 16,000 members in New Jersey in the public and private sector, according to its Web site, making it the largest of the union's locals in the country
"If I were negotiating face to face with her as the sole element, I might consider recusing myself, but I don't think it's a necessary step given that our relationship has ended and this is a very transparent process," he said.
Some labor experts said Wednesday that the financial relationship between Mr. Corzine and Ms. Katz had the potential to raise doubts among both union members and taxpayers.
Herman Benson, secretary treasurer of the Association for Union Democracy, a labor advocacy group, said that even if Ms. Katz were to recuse herself from lobbying or negotiating with an administration led by Mr. Corzine, they would face doubts.
"If the union gets a good contract, it's helpful to her administration and it looks like the governor was favoring her because of the relationship," Mr. Benson said. "And if the union gets a bad contract, there's questions about whether she was influenced by the money. So to put all those doubts to rest, she'd have to either give back the money or resign the job."
But Mr. Corzine said that he was confident that those steps would be unnecessary because any negotiations involving his administration and Ms. Katz's union would face such immense scrutiny that the public will be assured that they are both acting ethically.
"I believe I know how to make sure that public service is exactly that: serving the people who elect you," he said.