BERNE (Reuters) - Joao Havelange has quit as FIFA's honorary president while Sepp Blatter has been cleared of misconduct in the ISL bribery case, the final report into the matter by FIFA's ethics committee said on Tuesday.
The report, which brought the curtain down on a case which has clouded FIFA for the last decade, described Havelange's behaviour as "morally and ethically reproachable" in his dealings with ISL, FIFA's former marketing partner.
The report by Hans-Joachim Eckert, head of the ethics committee's adjudicatory chamber, cleared FIFA president Blatter, who was secretary-general at the time, of any wrongdoing.
However, it added that Blatter had at one point been "clumsy" and questioned whether he should have known that ISL was making payments to top FIFA officials including Havelange, who was president from 1974 to 1998.
It also said that former South America Football Confederation president and FIFA executive committee member Nicolas Leoz, who quit his posts last week citing ill-health, had taken "bribes" from ISL which went bankrupt in 2001.
The report said that any action against 96-year-old Brazilian Havelange, who resigned his position on April 18, and 84-year-old Parguayan Leoz would be "superfluous" following their resignations.
"The ISL case is concluded for the ethics committee," it said, adding that FIFA only introduced an ethics code in 2004. "No further proceedings related to the ISL matter are warranted against any other football official."
Details of the case were revealed last July when a Swiss prosecutor said in a legal document that Havelange and former executive committee member Ricardo Teixeira took multi-million bribes from ISL on World Cup deals in the 1990s.
FIFA subsequently set up its own investigation led by Michael Garcia, a U.S. attorney who heads the investigatory chamber of the ethics committee.
"It is clear that Havelange and Teixeira, as football officials, should not have accepted any bribe money, and should have had to pay it back since the money was in connection with the exploitation of media rights," Eckert's report said.
"From money that passed through the ISMM/ISL Group, it is certain that not inconsiderable amounts were channelled to Havelange and to his son-in-law Ricardo Teixeira as well as to Nicolas Leoz, whereby there is no indication that any form of service was given in return by the them.
"These payments were apparently made via front companies in order to cover up the true recipient and are to be qualified as "commissions", known today as "bribes"," the report said.
"Leoz...claimed that all of the money he received from ISL was donated by him to a school project, but only in January 2008 - eight years after he received it." said the report, adding that the Paraguayan had not been "candid" with FIFA's executive committee or the ethics investigation.
It added: "There are... no indications whatsoever that President Blatter was responsible for a cash flow to Havelange, Teixeira or Leoz, or that he himself received any payments from the ISL Group, even in the form of hidden kick back payments.
"It must be questioned, however, whether President Blatter knew or should have known over the years before the bankruptcy of ISL that ISL had made payments (bribes) to other FIFA officials.
"President Blatter's conduct could not be classified in any way as misconduct with regard to any ethics rules."
Eckert also referred to a payment of 1.5 million Swiss francs ($1.60 million) which was sent to FIFA in 1997 and earmarked for Havelange. When it was brought to Blatter's attention, he ordered it to be returned to ISL.
Blatter told the investigation he did not suspect it was a commission. "The conduct of President Blatter may have been clumsy because there could be an internal need for clarification, but this does not lead to any criminal or ethical misconduct," said the report.
Blatter said he noted the report "with satisfaction"
"I have no doubt that FIFA, thanks to the governance reform process that I proposed, now has the mechanisms and means to ensure that such an issue - which has caused untold damage to the reputation of our institution - does not happen again," he said in a statement.
Editing by John O'Brien and Justin Palmer