The Corrections Department is about introduce new rules to stop prisoners running businesses after a murderer was able to run help run an imports business from behind bars.

The introduction of the new rules next week comes after the department carried out an independent review when it was revealed Phillip John Smith, a convicted murderer and sex offender, had been able to help run his business from prison, which sells Chinese electronics, since 2008, The Dominion Post reported.

Smith, 36, is serving a life sentence of imprisonment for the brutal murder of the 35-year-old man, whose name is suppressed, in Wellington in 1995. He was also sentenced for serious sexual offending against the victim's older son, for the aggravated burglary of the family home and for kidnapping the victim's wife and younger son.

The new rules require all sentenced prisoners to declare any self-employment activities, which will then be assessed for approval, which would only be granted in "exceptional circumstances".

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Smith's lawyer and civil liberties expert Tony Ellis said the changes were a knee jerk reaction.

Corrections Minister Judith Collins said she fully the tightening of rules around prisoners running businesses.

- NZPA