Havelange, the 96-year-old former FIFA president, and his former son-in-law Ricardo Teixeira were named in court documents as having received millions of pounds in bribes from collapsed marketing company ISL during the 1990s.
Blatter said that such payments were not illegal at the time - under Swiss law - and could not be judged by modern standards.
Asked to respond to having known about the backhanders, Blatter said on www.fifa.com: "Known what? That commission was paid? Back then, such payments could even be deducted from tax as a business expense. In modern times, that would be punishable under law.
"You can't judge the past on the basis of modern standards. Otherwise it would end up with moral justice. I can't have known about an offence that wasn't even one."
Blatter did confirm he was the person referred to in the court documents as P1 - the report states that the finding FIFA and P1 knew of the payments was "not questioned".
He added, however, that it was not up to him to remove Havelange from his honorary post.
"I don't have the power to call him to account," said Blatter. "The Congress named him as Honorary President. Only the Congress can decide his future."
Blatter said the ISL case had led him to establish an ethics committee and the ongoing reform process.
He added: "That is why we have started to strengthen our control mechanisms: to prevent something like this happening in the future.
"The ethics committee, which was created in 2006 on my initiative, is a direct result of the ISL case. The reform process is moving exactly in this direction.
"To strengthen FIFA's judicial system, some important steps have already been taken with the introduction of a two-chamber system - an adjudicatory body and an investigatory body. The executive committee will appoint the chairmen of these two chambers next week."
Neither Havelange nor former executive committee member Teixeira ever faced disciplinary action from FIFA.
Instead, the world governing body also agreed to pay a Swiss court 2.5million Swiss francs (£1.64m) in compensation - but only on the condition that criminal proceedings against Havelange and Teixeira were dropped.
The court report states Havelange was paid at least CHF1.5m (£1m), Teixeira at least CHF12.74m (£8.37m) and the pair may have received as much as CHF21.9m (£14.4m).
The two men have dominated Brazilian football between them for the last 50 years. Teixeira only stepped down earlier this year from FIFA's executive committee and as head of Brazil's 2014 World Cup organising committee after it became apparent the report would be published.
Havelange resigned from the International Olympic Committee in December after 48 years just days before he was due to be sanctioned following their own investigation into the ISL case.