Linda Auger, head of Tyco's accounting department, said the Bermuda conglomerate refinanced the sailboat, known as the K IV project internally, for Kozlowski and the loan was carried on its books for a time in its construction and process account. The loan was later reclassified as a "key employee" loan to Kozlowski.

Tyco had a program, known as KELP, to loan money to key executives to pay income taxes associated with the vesting of restricted shares. That program was later expanded to allow some employees to borrow money for more than tax payments.

Kozlowski and Mark Swartz, Tyco's former chief financial officer, are on trial in State Supreme Court in New York, charged with looting $600 million from the company in unauthorized pay and illicit stock sales. Each faces up to 30 years in prison. They have denied wrongdoing.

Auger testified Wednesday that she questioned several purchases charged to the company by Kozlowski, including an $8 million painting to his KELP account, $50,000 in flowers and plants for a Christmas party and hundreds of dollars in extravagant tips at dinners.

She said she discussed the purchases on several occasions with Swartz, who told her on at least one occasion that he would discuss the charges with Kozlowski. Auger didn't remember the specifics of all of the conversations, but said Swartz told her to make sure the painting was charged to Kozlowski's KELP account.

Much of Auger's testimony Wednesday reiterated previous testimony last week by Sheila Rex, another member of Tyco's accounting department, that Tyco kept separate accounts on its ledger for loans to Kozlowski and Swartz.

Auger also said Wednesday that certain administrative assistants were given authority to approve expenditures by executives after she authored a memorandum in March 2001 admonishing them for doing so. Auger said she wrote the memo after the company saw excessive charges for limousine service at its New York office.