Steve Latham stood for Parliament in West Bromwich East in the General Election when his first controversial comments about Islam was infiltrating Labour came to light.
Despite that he was selected as candidate for the Sandwell Council ward of Newton in a by-election.
Then it emerged he had copied and pasted a passage that appeared previously on a far right blog onto his Facebook page. It said 'European integration amounts to genocide'. Mr Latham said he did not remember where it had come from.
Now leaked minutes of a Sandwell UKIP branch meeting reveal the party's national chairman Steve Crowther had also got involved and asked that former pub landlord Mr Latham not be allowed to stand again.
And they reveal the party lost a 'major local donor' as a result.
The comments also led to Mr Latham being dropped from driving a coach on National Express routes. He was contracted to the company by a third party.
The minutes reveal how Sandwell branch chairman Mr Crowther had informed Mr Latham that following his second negative national newspaper spread about Facebook comments his campaign was dead in the water from that point and support had been withdrawn.
Mr Latham came third in the Newton ward by-election.
The minutes said: "For the second time in four months he managed to get the branch some bad publicity in the national and local press over a Facebook post about mixed race.
"There were several complaints from both inside and outside of the branch and a major local donor has withdrawn funding because of this. SL is not going to be allowed to stand in any elections again representing UKIP."
Mr Latham, who used to run The Joker and Scott Arms pubs in Great Barr, said: "I still support UKIP. I believe in their vision. But a couple of people in the Sandwell branch took it upon themselves to stop me standing as a candidate. They are trying to stop debate."
He said he would consider standing as an independent in future.
Dean Perks, UKIP constituency manager, said: "Steve Latham is a decent guy. We are not a party that stifles free speech. But if he was to put himself forward for election again he would not pass our vetting process at the moment to become a candidate."
He said the reference to Mr Crowther was because he asks branches to 'think long and hard' about all candidates, adding: "Nobody above the branch decides who stands."
UKIP holds just one seat on Sandwell Council. The other 71 are all Labour and the Tories were wiped out in May, losing their last seat.