A coronial inquest has heard the man considered the only suspect in the 1968 disappearance of Bendigo teenagers Maureen Braddy and Allan Whyte told police the couple were still alive and part of a 'government' cover up.
Maureen Braddy and Allan Whyte were last seen at a Bendigo YMCA dance hall in November 1968.
Detective Sergeant Allan Birch, of the homicide squad, told the coronial inquest in Bendigo this morning that Maureen's father Stanley Braddy was suspected to be responsible for their unlawful killing.
Detective Sergeant Birch said Braddy had told police in an interview last year that Maureen and Allan were abducted as part of a 'slavery trade arrangement'.
Braddy claimed both Maureen and Allan were still alive but refused to reveal their whereabouts because they had children, were happy and did not want their lives interfered with.
The inquest heard Stanley Braddy had told police in an official statement that a 'politician' had rung their house and told his wife that Maureen and Allan were okay and to stay away.
Braddy told police the politician said: "The government's involved and it's bigger than you. Stay away.''
Braddy refused a police request to name the politician.
Detective Sergeant Allan Birch told the inquest this version of events was "wholly incredible".
He said there was "no other reasonable hypothesis" other than Stanley Braddy was involved in the disappearance of Maureen and Allan.
He said Braddy's version of events caused increased suspicion about his involvement.
Braddy, 82, lives in Strathfieldsaye and has been subject to two interviews with police in the past year.
Sergeant Birch said there were difficulties in gaining enough evidence to pursue the homicide investigation further.
"There is simply a lack of evidence. We don't have the bodies and don't have eye-witness accounts or strong circumstantial evidence," he said.
The coronial inquest heard from Lyn Ireland, the younger sister of Maureen Braddy, that she was confident she saw her father the night Maureen and Allan disappeared.
Ms Ireland claimed at the opening of the inquest in March 2012 that she had seen her father Stanley Braddy and his friend Ted Beasley holding a bloodied body on the evening of November 23, 1968.
Returning to the witness stand this morning, Ms Ireland stood by her version of events.
"I know what I saw," she said.
"It was a memory I didn't want to face for years."
Mr Braddy was not present at the coronial inquest today.
The inquest will continue this afternoon.