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by Magee Hickey
TRENTON, N.J. (CBS/AP) ― An ethics panel investigating the governor found that payments he made to an ex-girlfriend who also leads a state worker union did not violate conduct rules but critics said the governor got off easy.

In a report released Tuesday, the two-person governor's Ethics Advisory Panel found Jon S. Corzine didn't violate conduct rules because the payments made to Carla Katz, who heads a local of the union, Communications Workers of America, occurred before he was governor.

The panel also found the payments didn't compromise contract talks between the union and the state because the negotiations were done through the state's negotiating team, not directly by Corzine or Katz.

"There was no conflict of interest in the governor's handling of the CWA labor negotiation," the panel found.

Corzine asked the panel in early April to review whether recent contract negotiations with state workers were tainted by his past romantic relationship with Katz.

His staff Tuesday praised the 37-page report.

"The conclusions reached are soundly grounded and well-warranted," said Corzine's chief counsel, Kenneth Zimmerman.

Both the governor and Katz have contended their past relationship -- which involved Corzine giving Katz $470,000 to buy a house and other gifts he has declined to specify -- didn't create a conflict.

"I am pleased that the ethics panel report confirms what I have always maintained, that all bargaining took place at the table," Katz said Tuesday.

But both declined to give the panel additional details about their financial arrangements, and the administration declined efforts by Republicans and the media to obtain copies of the governor's e-mail correspondence with Katz during the contract talks, something that drew criticism.

"It was bad enough that he refuses to be forthcoming with the public, but to conceal facts from the very people who are being held up as the final arbiters undermines the confidence people should have in this process," said New Jersey Republican Party Chairman Tom Wilson, who added that he would seek copies of the e-mail correspondence through a state open public records panel.

Corzine, a multimillionaire from his days as Goldman Sachs chairman in the 1990s, asked for an opinion from the panel after Republican Steve Lonegan, the mayor of Bogota, also asked it to review Corzine's actions.

Lonegan initially asked a state ethics commission to investigate Corzine but the commission said it lacked jurisdiction over the governor.

Lonegan said he wasn't surprised by the findings that he deemed "a sham."

"Here's the status of ethics in the state of New Jersey -- we have none," Lonegan said.

But Zimmerman praised the report as being done by "two individuals with unimpeachable integrity and credibility."

The panel consists of former Supreme Court Justice Daniel J. O'Hern and former state attorney general John Farmer Jr., who both declined in a statement to comment on the report.

Corzine and Katz ended their relationship in November 2004, when the Democratic Corzine was a U.S. senator. The report said Corzine agreed to make payments to Katz when their relationship ended, but no payments were made after Corzine became governor in January 2006 and no more payments are expected.

"Because all payments were made to Ms. Katz prior to the governor's taking office, the payments to Ms. Katz do not implicate the governor's code of conduct," the report found.

It also found Corzine's negotiating team and top CWA officials handled the negotiations, not Corzine and Katz. While the two remained on friendly terms and talked and e-mailed with each other during the early negotiations, the panel found Corzine ceased communication entirely with Katz in February as talks intensified.

The panelists recommended anyone with a close relationship to a governor be directed to a specially appointed person within the governor's office when communicating with the administration.

The union negotiations resulted in a deal that raised salaries but cut health and pension benefits for state workers, a proposal opposed by Katz. State workers approved the deal April 12, the same day Corzine was seriously injured in a car accident.

(© 2007 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)