German media say a councillor for Angela Merkel’s Christian Democrats (CDU) was one of a group of men who tied an Iraqi asylum-seeker to a tree.
It happened after the asylum-seeker argued with staff in a supermarket in the town of Arnsdorf, near Dresden.
Detlef Oelsner told local media (in German) that he would still have done it if the man were German.
He said: “We showed civil courage and would have done the same no matter who was involved.”
He stopped short of confirming he tied the man to the tree, but his involvement was reported by German media.
The incident happened on 21 May but came to light this week when a video was circulated online showing the 21-year-old man, an inpatient at a psychiatric hospital, lifting a wine bottle off a shelf during an argument with a supermarket worker.
He did not hurt anybody.
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The video then shows a group of men surrounding and forcibly dragging the Iraqi man from the shop. Police say the man was later found tied to a tree.
When police arrived, the men told them they had done it to stop the asylum-seeker from running away.
He was treated by paramedics before being returned to the psychiatric hospital.
Police are investigating the men involved on suspicion of false imprisonment, and the asylum-seeker on suspicion of intimidation. They have asked for witnesses to the incident to come forward.
Police did not name anyone involved but the German press have named Mr Oelsner, who ran for mayor in Arnsdorf last year. He told Die Zeit (in German) that he lived next door to the supermarket and heard the incident over the garden fence before going in, helping subdue the Iraqi man and calling the police.
The video has mostly been circulated on anti-refugee websites, with some people calling the men a “citizens’ army”.
Dresden, 24km (15 miles) west of Arnsdorf, is where the anti-Islam Pegida movement is based. Refugees have been a controversial political issue since Germany took in more than a million people fleeing conflict in Syria and other countries.
Police figures showed a five-fold jump in attacks on migrants in Germany in 2015, compared with the year before.
After being asked on Facebook about the incident, the supermarket chain Netto said the workers in the shop did not call the group of men in.
Netto said it “goes without saying that customers will be treated the same, independently of their ethnic origin, religion, gender or age”.