Thank you for the reply.
This is a private company (about 150 people) and HR seems very much on my side but I guess they are just trying to defuse the situation without making big waves so to speak. I went to HR specifically for the reasons you mentioned. She was already talked to by other people regarding this alleged relationship and from what I heard, this is not the first time this came up only this time somehow I got sucked into this mess.
What do you mean I refuse to cooperate? My boss is demanding me to tell her names of people who told on her (about her relationship) to HR and Controller. This is not work related and I don't have to obey orders that are not work related. I don't even know exactly who said what. I just know that I don't have to answer questions not related to my work or something that is required (such as if I know of some theft at work or something).
If what you are saying is true, this is one screwed up system we have.

