Lara Wharepapa-Bridger's 14-minute Facebook rant about her conversation with Sir Peter Leitch had 100,000 views before she took it down.
"Sir Peter Leitch, the Mad Butcher, you should be ashamed of yourself," she said.
"The really, really upsetting thing is this is the first time I've been racially abused in my own country."
Ms Wharepapa-Bridger was at a Waiheke Island vineyard yesterday when the Mad Butcher spoke to her party, warning them not to drink and drive.
The 23-year-old told him her mother was their sober driver, and alleges that Sir Peter then told her she wasn't a local.
"I said I was tangata whenua, I was born on this island - he said to me, 'No you're not - this is a white man's island and you shouldn't be here.'"
In a statement, Sir Peter says he was referring to the many police on the island, and joked that Waiheke was also a white man's island.
"This was not a serious comment and was only ever intended to be light-hearted banter," he said.
Ex-league player and boxer Monty Betham agrees with Sir Peter, who he says is like a father to him and someone he's known since he was four years of age.
"It's a misinterpretation that's gone horribly wrong," Betham said.
"He is definitely not a racist - he's a guy that's helped so many different ethnicities [and is] good at giving money, his time, his support."
From their Waiheke home. Sir Peter's wife Lady Janice said Sir Peter was deeply hurt by the accusations and won't make any further comment on the matter.
Ms Wharepapa-Bridger says she took the video down after receiving threats.