Shanahan has been acting defense secretary since former Pentagon chief James Mattis left the position at the end of 2018.
The new Department of Homeland Security Request for Assistance for additional USA troops and other logistical support on the southern border has been sent to the Pentagon but has yet to be signed by acting Secretary of Defense Pat Shanahan, according to two USA defense officials.
"We did not substantiate any of the allegations", it said.
The IG's report concluded the acting secretary fully cooperated with the investigation, and is in full compliance with his ethics agreements and ethical obligations.
The investigation was in part based on a complaint filed by the Citizens for Responsibility and Ethics in Washington, a watchdog group, which said Shanahan had appeared to violate the ethical rules by promoting Boeing while at the Pentagon.
The outcome could pave the way for US President Donald Trump to nominate Mr Shanahan as permanent defence secretary. "While Mr. Shanahan did routinely refer to his prior industry experience in meetings, witnesses interpreted it, and told us, that he was doing it to describe his experience and to improve Government management of DoD programs, rather than to promote Boeing or its products".
Acting Secretary of Defense Patrick Shanahan, center, talks with El Paso Sector Chief Aaron Hull, right, at El Paso International airport after doing a Osprey aircraft tour of the U.S. -Mexico border, February 23, 2019.
The investigation began in March after a series of complaints accusing him of promoting his former employer, the Boeing company, which could have constituted a violation of ethics agreements.
One of the allegations was that Shanahan criticized the F-35 aircraft made by Lockheed Martin and "repeatedly dumped" on the jet in meetings. However, Shanahan told investigators that he said the F -35 program was "f-cked up".
The report noted that with the exception of two generals, the allegations "did not identify specific witnesses who may have heard the comments about Boeing or its competitors". The inspector general's office found that he did so.
"This agreement ensures any matters pertaining to Boeing are handled by appropriate officials within the Pentagon to eliminate any perceived or actual conflict of interest issue (s) with Boeing", the statement added. "Acting Secretary Shanahan's focus remains on our global operations, our strategy, and our service members, civilians, and families", he said in a statement.
The resolution of the allegations takes on increased importance because Shanahan, 56, is the leading contender to become Defense Secretary.
A Washington state native, Shanahan initially stepped into the No. 2 spot at the Pentagon in 2017 after leaving his business career at Boeing.
"We are not the Department of No", Mr. Shanahan told Pentagon officials after Space Force was announced, arguing that it was a presidential priority and could help develop new military capabilities more quickly.