Brian Cookson told Reuters in an interview that the UCI had also covered up Lance Armstrong's positive tests for drugs in the 1999 Tour de France.
"The UCI was always going to prioritise the image of the sport and the business of the sport over the integrity and the honesty of the sport, and that was a very bad signal that was given out at that time," he said.
Cookson was speaking at the cycling governing body's headquarters in Aigle, Switzerland, on the day of the release of a report by the Independent Reform Commission, which was set up last year to look into the sport's ugly past including the Festina affair and Lance Armstrong doping scandal.
The CIRC report said the then UCI management had colluded with Armstrong to protect him as the American cheated his way to seven Tour de France titles.
"After the Festina affair in 1998, the 1999 Tour which was supposed to be the tour of renewal. In that tour, Lance Armstrong had a positive test for cortisone, which was covered up by the UCI," Cookson said.
He added that doping in cycling was far from eradicated but an environment now existed "where riders can now at least be competitive when riding clean".
The former UCI management's shortcomings were first exposed in 2012 when the U.S. Anti-Doping Agency (USADA) published its reasoned decision after banning Armstrong, who later admitted to cheating, for doping.
Cookson took over as UCI president in 2013 with a mission to clean up the badly-tainted sport.
The CIRC report said: "UCI exempted Lance Armstrong from rules, failed to target test him despite the suspicions, and publicly supported him against allegations of doping."
There was, however, no evidence of outright corruption in the report.
"I'm happy that it reports that there was no corruption and no complicity in relation to doping and that, for me, is very important," Pat McQuaid, from whom Cookson took over the presidency, told Reuters.
McQuaid's predecessor, Hein Verbruggen, said that the CIRC's main criticism was that the policies put in place to combat doping during his presidency were inadequate.
"That is a rather cheap shot from people who today have the benefit of 25 years of hindsight," Verbruggen said in a statement to Reuters.
The CIRC interviewed 174 officials, team managers, riders and former riders over the course of an investigation that lasted over a year. It found that doping was less prevalent but still endemic.