Queensland schoolboy Daniel Morcombe.

A secretly recorded video inside a Perth hotel room that captured Brett Peter Cowan admitting he took Queensland schoolboy Daniel Morcombe to a secluded spot and killed him in a panic has been played to a jury in Brisbane.

Mr Cowan, who believed he was talking to the national boss of a powerful crime gang, was recorded describing how he dragged the 13-year-old's body down an embankment, stripped him of his clothing and covered the boy with branches and trees.

Perth the stage for murder case sting

He was also recorded telling the man he knew as "Arnold", in reality a WA undercover operative, that he returned to the scene about a week later with a shovel and could only find a small fragment of bone, which he broke up.

Mr Cowan, 44, has pleaded not guilty to murdering Daniel on the Sunshine Coast on December 7, 2003.

Facing trial in the Supreme Court in Brisbane, the Bunbury-born accused has also pleaded not guilty to indecently dealing with a child aged under 16 and interfering with a corpse.

Yesterday, the jury was told of an elaborate undercover operation involving police operatives from WA and Queensland that led to Mr Cowan's arrest.

The sting involved covert officers posing as a brothel madam, prostitute, corrupt officials and members of a crime gang that Mr Cowan was repeatedly told could fix things and make any problem disappear.

The court has been told the fictional characters acted out at least 24 scenarios across Perth and regional WA, building a rapport with Mr Cowan and convincing him the gang operated on a mantra of loyalty, honesty and respect.

The ruse was building up to a "big job" by the gang, a $1 million drug deal that promised to net Mr Cowan a $100,000 pay-out.

Today, the jury was played audio tape of Mr Cowan on a road trip to Kalgoorlie with another gang member on August 9, 2011, before being interrupted by a call from the big boss "Arnold".

"Arnold", who gave evidence this morning and is otherwise known as covert operative 483, wanted to see Mr Cowan.

At a meeting in a room at the Hyatt, operative 483 told Mr Cowan he had received information that he had been the person who killed Daniel.

"What we do is based on respect and honesty," operative 483 said.

"I don't care what you have done. I have no real qualms at all ... I have had a lot of c.... on my books.

"What concerns me more than anything else is the information that has come to me.

"I can't sort out what I don't know. Like I said, I pay good people good money to keep us clean."

Mr Cowan initially said he could "guarantee" he had nothing to do with Daniel Morcombe's disappearance.

But after operative 483's repeated references to the need for honesty, Mr Cowan said: "Yeah, I did it."

He described seeing Daniel at a bus stop, a bus passing because it was broken and offering the teenager a lift to a shopping centre.

"I took him to a secluded spot that I knew of," Mr Cowan was recorded telling the operative.

"I never got to molest him or anything like that. He panicked and I panicked and I grabbed him around the throat and before I knew it, he was dead."

Mr Cowan said he then put Daniel in his car and drove about 150m to a more secluded location before dragging his body down an embankment.

"I stripped him off and put trees and branches and covered his body," he said.

"His clothes I took back with me and threw into the creek."

Earlier in the trial, the jury heard evidence from forensic experts that pieces of bone found close to the area identified by Mr Cowan had been matched to Daniel.

In the video, Mr Cowan said he went back about a week later and could only find a fragment of bone.

The video will continue to be played to the jury this afternoon.

The West Australian

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