Police who led the Olivia Hope and Ben Smart murder inquiry say there is a "high probability" that objects found on the floor of Cook Strait are the bodies of the murdered Blenheim friends, according to a report in today's Evening Post newspaper.
But the newspaper says Assistant Police Commissioner Paul Fitzharris refused to approve funds for "what is essentially a very speculative search".
Ben and Olivia disappeared on January 1 1998 after celebrating New Year's Eve in the Marlborough sounds.
Scott Watson was convicted of their murder in 1999 and was sentenced to life in prison.
Documents obtained by the Evening Post under the Official Information Act (OIA) reveal Detective Inspector Rob Pope and Detective Senior Sergeant John Rae wrote to the deputy commissioner for operations seeking approval for a more detailed search of the Cook Strait floor near the Tory channel.
A Navy sonar search of the area revealed two distinct "targets" out of the approximately 50 that they found.
The confidential Navy report was quoted as saying: "These [two] targets could possibly be linked to each other at a distance apart of approximately 20m. An associated drag mark provides a possible link between the targets.
"It has been concluded that the targets are unlikely to be a natural event. The targets are surrounded by mud or a semi-hard surface and appear to be depressions created by a man-made event."
However, there was nothing in the report to confirm the targets were bodies and the Navy recommended that the search be suspended.
In his letter asking for approval for a further search Mr Pope wrote: "Sufficient information exists, in conjunction with the navy report, to conclude that there is a high probability that the remains of Ben Smart and Olivia Hope are at or within proximity of the contact points identified by the navy."
His colleague Mr Rae wrote that the estimated size of the targets from the sonar could indicate that one is a weight attached to another larger object.
While the larger object was regarded as too small to be two bodies - "perhaps in a sail or sleeping bag" - it was unknown whether the "package" was embedded in the sea bed, he said.
Olivia Hope's sleeping bag was never recovered. Nor were the weights and anchor chain believed to be on Watson's boat Blade.
The newspaper report said the Navy search was sparked by witnesses' accounts of Watson's boat movements.
Two ferry passengers spotted his yacht off the Tory Channel mouth about 4.45 pm, January 1, when Watson claimed to be elsewhere.
The families of Ben and Olivia were understood to have been told that a private recovery would cost between $15,000 and $20,000.
Feature: The Sounds murders