A UN inquiry into East Timor violence said further investigations were needed to see if former PM Mari Alkatiri bore any criminal responsibility.
The report said Mr Alkatiri failed to prevent weapons falling into the hands of civilians despite credible evidence that it was happening.
Mr Alkatiri stepped down as PM in June under intense pressure.
East Timor was rocked by two months of unrest that left more than 30 people dead earlier this year.
International peacekeepers had to be brought in to restore order, after thousands of people fled their homes as street battles broke out between rebel soldiers and those loyal to the government.
The violence was triggered by Mr Alkatiri's decision to sack 600 disgruntled soldiers in March.
Mr Alkatiri was accused of authorising the distribution of arms to a civilian hit squad with orders to kill his political rivals - a claim he has strongly denied.
But a special UN commission investigating the violence found there was "credible information that such [weapons] transfer was ongoing and involved members of the government".
The Commission said it had no evidence that could suggest Mr Alkatiri be prosecuted for being personally involved in the illegal movement of weapons
But its report said Mr Alkatiri failed "to use his firm authority to denounce the transfer of security sector weapons to civilians".
It recommended he face "further investigation to determine whether... [he] bears any criminal responsibility with respect to weapons offences."
The commission also recommended that the former defence and interior ministers be held accountable for the illegal transfer of weapons.
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