It sounds like the new boss is angry that you may have pointed out to him how he is not making the best management decisions. You probably meant well and wanted to make suggestions on how to do things better - but he may have taken this as criticism and is now trying to hurt you by damaging your reputation and making false allegations against you. It's a tough place to be.
I would suggest that you write him a letter clearing indicating 1) that you have heard from other employees that there have been questions on whether you are involved with another employee, 2) that this has been emotionally upsetting for you as you have maintained your professional demeanor and the standards of the company under all circumstances, and 3) that if there are questions about any kind of inappropriate behavior you would request that they be discussed with you because the inquiry has upset other employees as well as yourself.
I would point out that while we do not always agree on management issues, you are there as a team member to see that the company goals are met and to help in anyway possible. You hope that you can continue to work with him to make the company the best it can be.
If you are in fact getting cozy with another employee, I would say stop it immediately. The workplace is not the place to find romance despite what other people may think. The whole office will know about your private life - despite the fact that you think your affair is hush-hush - and your romance will overshadow whatever contributions you may make as a manager. It is just not worth it. Your reputation is shot.
This guy may just be trying to get your attention that he has the upper hand - and since he cannot come out and say it - is doing his song and dance to get your attention. But beware, his threat is real and you need to toe the line. If you need to disagree, point out that you have an idea that you would like to share as a way of pointing out a better idea. Or say something like, "I know you like plan A, but I would ask that you consider plan B since it would save us money and save us time over the next few months". Then wait to see what he says.
Believe me, I know how frustrating it can be to work with someone who has low standards and doesn't go for it, but this is probably as much as this person can offer. It doesn't have to do with intelligence and/or work history and/or education - some people are just over-educated but still don't have what it takes - so it doesn't matter how many degrees they have. They make dumbo mistakes and then the company loses money, employees, morale, all kinds of stuff. Then when they see this happening, they wonder - yes wonder - how in the world can this be happening.
I say, you stay solid and real, make your recommendations to the best of your ability, stay professional, and if need be move on if it doesn't improve. Take care.
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