'We were following a map through the Belanglo State Forest and approached a boulder near a place known as Executioner's Drop,' Keith Siely, one of the men, told a magistrate's court in Sydney.
'We smelt a whiff of something dead. I saw what appeared to be a dead wombat, and my partner thought he saw a kangaroo's leg. Then it all clicked into place. What we thought was the kangaroo's leg was her elbow, and the wombat was the hair on her head.'
Mr Siely and Keith Caldwell, his orienteering partner, were giving evidence at the start of a pre-trial hearing of charges against Ivan Milat, a 49-year- old road worker.
He is accused of murdering Walters and her British travelling companion, Caroline Clarke, both 22, as well as three German and two Australian backpackers, and of dumping their bodies in Belanglo State Forest, 90 miles south of Sydney.
The hearing into the killings, Australia's most sensational serial killing, opened to a packed court house in Campbelltown, a Sydney suburb near the Hume Highway, where Mr Milat is accused of picking up the seven young hitch-hikers between December 1989 and April 1992 and murdering them before disposing of their remains. Mr Milat, dressed in dark blue trousers and jumper and a light blue shirt, sat hunched foward in the dock as he listened to the grisly details unfold about the discovery of his alleged victims.
The drama of the first day was heightened when Michael Price, the magistrate presiding over a hearing which is expected to last three months, was forced to clear the court just before lunch-time after a bomb hoax.
Mr Price will hear evidence from about 200 prosecution witnesses, including relatives and friends of the dead backpackers from Britain and Germany, before deciding whether to commit Mr Milat to stand trial.
Among them will be a 24- year-old British man whom police describe as 'Victim A'. They allege that Mr Milat tried to murder Victim A when he picked him up outside a news agency on the Hume Highway in January 1990.
Ian Lloyd QC, appearing for the director of public prosecutions, told the court that the British tourist had escaped from Mr Milat's car when he stopped it about half a mile from the turn-off to the Belanglo forest, produced a rifle and said: 'This is a hold- up.'
As the man fled down the highway, Mr Milat allegedly fired at him, then ran after him. The man flagged down a woman driver who took him to a police station, where he reported the incident. 'Victim A will say that his backpack was left in Milat's vehicle when he fled,' said Mr Lloyd. 'He will be shown a shirt seized from a house where Milat lived with his mother, when police later raided the house, and will identify the shirt as one in his backpack.'
Walters, from South Wales, and Clarke, from Northumberland, were the last of the seven victims to go missing and the last to be murdered but the first to be discovered. They left Sydney together in April 1992 to hitch-hike to Victoria, where they planned to find jobs picking fruit. Five months later, on 19 September, Mr Siely and Mr Caldwell found Walters's body during a weekend orienteering event.
More than a year passed before the bodies of the missing German and Australian backpackers were found in the same forest, with knife and gunshot wounds.
One of the German women, Anja Habschied, 20, was decapitated. In raids earlier this year on Mr Milat's house in the Campbelltown region, and on those of his relatives, police seized backpacks, a water bottle with the name of one of the German victims allegedly scratched out and a trigger, bolt assembly and magazine for a .22 Ruger rifle, which allegedly had Mr Milat's fingerprints.
Mr Lloyd said: 'Ballistic experts believe that the gun parts . . . were from the gun which fired the fatal shots which killed Caroline Clarke.'
He added: 'My ultimate submission will be that the discovery of the backpacks and gear, and the firearms, links Milat to the various murders of the backpackers. The evidence creates a strong circumstantial case against Milat.'Reuse content