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Jeffrey Gafoor led into Cardiff Crown Court for sentencing in July 2003
The killer of Lynette White is set to be moved to an open prison.
Jeffrey Gafoor was given a life sentence in 2003 and ordered to serve a minimum of 13 years for the 1988 murder.
The Parole Board said Gafoor was “suitable” for the move, which would prepare him for possible release.
A Ministry of Justice spokesperson said “our thoughts remain with the family of Lynette White as they learn of this decision”.
Gafoor was tracked down using new DNA techniques, 11 years after three men had murder convictions quashed.
Tony Paris, Yusef Abdullahi and Stephen Miller – who became known as the Cardiff Three – were wrongly jailed for life in 1990 for Ms White’s murder and freed in 1992.
Ms White, 20, a sex worker, was stabbed more than 50 times by Gafoor in a flat in the docklands area of Cardiff in 1988.
A spokeswoman for the Parole Board told BBC Wales: “The Parole Board has made the decision not to release Mr Jeffrey Gafoor following an oral hearing but has recommended that he is suitable for a move to an open conditions prison.
“We will only make a recommendation for open conditions if a Parole Board panel is satisfied that the risk to the public has reduced sufficiently to be manageable in an open prison.
“This is a recommendation only and the Ministry of Justice will now consider the advice and make the final decision.”
Lynette White was found murdered on St Valentine’s Day in 1988
The Ministry of Justice spokesman said: “The independent Parole Board conducts a thorough risk assessment before recommending a transfer to open conditions but the Prison Service retains the ability to return offenders to closed prison at the first sign of any concern.”
According to Ministry of Justice guidelines, “as the Parole Board carries out a thorough risk assessment, it has been long-standing policy to only reject their recommendations in very limited circumstances”.
Gafoor confessed to stabbing Ms White in a row over £30 after new DNA technology led South Wales Police to him in 2003.
In sentencing Gafoor, the judge said he had “allowed innocent men to go to prison” for a crime he knew he had committed.
According to the Parole Board, the purposes of a period in open conditions are “to allow areas of concern to be tested in conditions more closely resembling those to be found in the community, to allow prisoners the opportunity to take more responsibility for their actions, and to develop or advance the release plan”.
The parole board’s hearing last month was the third for Gafoor, after two previous failed applications for parole.
Clockwise top left: Tony Paris, Yusef Abdullahi and Stephen Miller were convicted in 1989, Ronnie and John Actie were acquitted