The application was undecided and one of the reasons she gave was: "New Zealand citizens/residents are unlikely to listen to an Indian radio station."
Ms Sathiyanathan, originally from Sri Lanka, said: "I was shocked by what I took to be a racist statement."
She filed a complaint after failing to get a retraction of the statement or an apology from the agency.
Immigration area manager Michael Carley said the remark was made in the context of the employer having to prove they had made genuine attempts to recruit New Zealanders for the job of beauty therapist before offering the position to a migrant.
Mr Carley said the comment was made in an initial assessment of the essential skills work visa application. "INZ completely rejects any assertion that any of its immigration officers display any racial basis in their decision making, but apologises to anyone who took offence about the comment made," Mr Carley said.
Immigration specialist lawyer Alastair McClymont, who is Ms Sathiyanathan's employer, said the reason the advertisement was on Indian radio was because the advertised position was for a specialist Indian beauty therapist. "The treatment procedures used are not taught in New Zealand beauty therapy schools."
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