Pardon prisoner that has cheated (7)
I believe the answer is:
condone
'pardon' is the definition.
(both can mean to excuse wrongdoing)
'prisoner that has cheated' is the wordplay.
'prisoner' becomes 'con' (abbreviation for 'convict').
'that has' is a charade indicator (letters next to each other).
'cheated' becomes 'done'.
'con'+'done'='CONDONE'
(Other definitions for condone that I've seen before include "Overlook intentionally" , "Forgive, sanction" , "pardon" , "Nod once (anag) -- make allowances for" , "'Excuse, overlook (7)'" .)