An internal report released by Barack Obama’s transition team says neither the president-elect nor members of his staff had inappropriate discussion regarding Obama’s Illinois Senate seat.

The report, put together by incoming White House Counsel Greg Craig, was compiled in response to allegations that Illinois Gov. Rod Blagojevich (D) tried to auction off the Senate seat to the highest bidder.

“In addition, the accounts contain no indication of inappropriate discussions with the governor or anyone from his office about a ‘deal’ or a quid pro quo arrangement in which he would receive a personal benefit in return for any specific appointment to fill the vacancy,” Craig added.

The report said Obama’s incoming chief of staff, Rep. Rahm Emanuel (D-Ill.), had discussions with Blagojevich’s staff about the seat, but that he did nothing improper.

On a conference call with reporters, Craig, using words like “innocent,” reiterated that nothing untoward had happened in those conversations.

The incoming White House counsel also made clear that neither the president-elect nor Emanuel had any conversations with the U.S attorney’s office before Blagojevich’s arrest.

Craig said Obama and his staff found out about the investigation of the embattled governor “at the same time that the rest of the American public found out about it.”

He added that Emanuel did discuss a list of “highly qualified” candidates for the Senate seat, but emphasized that neither Obama, nor Emanuel nor adviser Valerie Jarrett offered “any kind of quid pro quo or negotiations.”

Blagojevich said during a defiant press conference last week that he had done nothing wrong.  Craig's report appears to bolster Blagojevich's case because  no one  from Obama's transition team expressed concerns that the governor or his staff was acting inappropriately.

Craig's five-page report notes that Emanuel and Blagojevich talked "one or two" times via telephone between Nov. 6 and Nov. 8. The topic of the conversation, however, was more on Emanuel's House seat than Obama's Senate seat.

Craig's report states, "Mr. Emanuel placed a call to the governor to give him a heads up that he was taking the chief of staff's position in the White House, and to advise him that he would be resigning his seat in the House of Representatives. They spoke about Mr. Emanuel's House seat, when he would be resigning and potential candidates to replace him. He also had a brief conversation with the governor about the Senate seat and the merits of various people whom the governor might consider."

There have been media reports speculating that Emanuel was looking for a placeholder to be put in his seat so he could later return to the House. Craig's report on Emanuel's discussion with the governor will likely intensify the placeholder speculation. 

In the criminal complaint, federal prosecutors indicate that "President-Elect Advisor" wanted something from the governor on Emanuel's seat. The complaint quotes the governor as saying when "[President-Elect Advisor] asks me for the Fifth CD thing I want to be in his head." Prosecutors explain "Fifth CD thing" to relate to a seat in the House representing Illinois's Fifth District, which is Emanuel's seat.

Emanuel, according to Craig's report, recommended that Blagojevich select Jarrett for the Senate seat. Later, Craig states, Emanuel learned that Obama did not want to recommend any one candidate. Instead, Obama wanted to offer names that the governor should consider, which the transition team did. Those names, excluding Jarrett, were Dan Hynes, Tammy Duckworth, Rep. Jan Schakowsky (D-Ill.), Rep. Jesse Jackson Jr. (D-Ill.), Lisa Madigan and Cheryle Jackson. Rep. Danny Davis (D-Ill.), who has expressed an interest in the Senate seat, was not put on Obama's list.

Obama has been under pressure to release information about any contacts his staff had with the embattled governor. The release of the report from the transition team, however, was delayed at the request of prosecutors investigating Blagojevich.

Republicans have demanded that Obama provide all information on contacts between his team and Blagojevich.

When the complaint against Blagojevich was announced, U.S. Attorney Patrick Fitzgerald took the unusual step of saying that Obama was not implicated. The complaint mentioned recordings of Blagojevich using profanity to describe the president-elect, and suggested Blagojevich was frustrated that Obama was not cooperating.

 This article was updated at 6:45 p.m.