Rashpal Chana had given his evidence at an employment tribunal hearing in Birmingham on Monday, but later settled with the respondents, the Department for Education and Skills in Runcorn, during an adjournment.
Mr Chana told the hearing that he had been a programme manager of life sciences at Sutton Coldfield college since 1997, when he applied for the temporary post in the science faculty at Wolverhampton college in 2002.
"I received a telephone call in June 2002, saying that my application had been shortlisted and that my details had been passed on to the (then) principal Ms Jane Williams," said Mr Chana. Ms Williams is now head of the post-16 standards unit at the DfES.
"I had the interview in November, but Ms Williams was not on the panel. I believe that this was because she had seen my application and identified that I was of ethnic origin, and that she would have found it difficult to justify not accepting me to the post if she had been present at my interview."
Mr Chana told the hearing that three days after the interview, he had been contacted by the college to congratulate him on his successful recommendation to the appointment which would be confirmed in December.
He told the hearing that this, combined with an email sent to him from the college discussing travel expenses and salary, had led him to believe that he had been appointed to the post.
But the final decision which Mr Chana says involved a second recruitment process which he had not been privy to, resulted in the appointment of another teacher, Wilf Hudson.
Mr Chana said that he had brought the DfES to an employment tribunal because he could see no other explanation other than racial discrimination for his non-appointment.
"I was equally as qualified, and in my view more experienced, than Dr Hudson. I therefore feel that I have been treated less favourably because of my ethnicity," said Mr Chana.
He added that he believed that his recommendation from the interview panel had been overruled by the principal Ms Williams after she had identified his ethnicity on his CV.