At the start of the trial last week, defence lawyer for Graham, Sarah Saunderson-Warner, said Watene had been shot at Graham's home but it was not done on purpose nor with murderous intent.
Through defence lawyer Fiona Guy Kidd, QC, Hyde also admitted he disposed of the body, but says Graham told him Watene had taken his own life.
The jury trial continued before Justice Gerald Nation in the High Court at Invercargill yesterday.
Officer in charge of Operation Watene, Detective Sergeant Christopher Lucy, said the missing person investigation threw up "slightly unusual aspects to the matter".
Checks with friends, family, bank transactions and telecommunications showed he had not been seen, spoken to anyone, or bought anything since April 16.
A search by friends and volunteers of local parks and rivers was also unsuccessful.
When police went to his address on April 23, there was no sign of anyone having lived there in days, he said.
"SOCO [scene of crime officers] examined the address and failed to find anything that was untoward."
A forensic examination carried out at his house between May 6 and 8 also failed to show signs of blood or foul play.
Search warrants were executed which allowed for surveillance of telecommunications from both Hyde's and Graham's phone, Lucy said.
Audio and video surveillance devices were installed in Graham's and Hyde's homes, and at the motel where Graham stayed while her house was forensically searched by police and specialist scientists from May 6.
Under cross-examination by Graham's counsel Sarah Saunderson-Warner, Lucy was asked if one of the reasons for bugging the motel was because the police search of her house would generate chat or communication.
"It was likely she was going to discuss it," he said.
Lucy agreed he had personally reviewed a police file that related to a Coroner's inquiry of the death of Murray Rivers who died in the Makarora River in October 2012.
Graham and her then partner Joshua Kingipotiki, were also on the boat when it drifted down the river and got caught in sand banks.
The boat hit a rock, and while Graham and Kingipotiki were able to reach safety, Rivers did not.
The pair raised the alarm and Rivers was found in the river the following day under some submerged willows, Saunderson-Warner said.
A Coroner found he had died of icschaemic heart disease, she said.
The trial continues on Monday.