Terry has continued to skipper both club and country in recent weeks, despite both the police and the FA currently conducting investigations into claims he made racist comments about QPR defender Anton Ferdinand during a match at Loftus Road last month.
Sexwale, a former anti-Apartheid campaigner, was primarily speaking in defence of FIFA President Sepp Blatter, who has caused controversy himself by appearing to deny the existence of racism in football.
But the South African also stated he feels Terry’s continued presence on the pitch sends out the wrong message.
“What was problematic was [Blatter's] initial statement as reported, which said racism does not exist on the pitch,” Sexwale said, speaking at a press conference in Johannesburg.
“This was rather unfortunate.
“With countless cases of racial slurs being spewed on the playing fields by players against others, that is well known.
“Our committee has joined the call for such players to be brought to book. Their racial indiscretions are totally unacceptable.
“The most known of these cases is Chelsea captain John Terry. [He] is also captain of the English national team.
“It is therefore not helpful for any side to bear him with the captain's armband whilst the indiscretion against another player of another race is still so fresh in mind.
“This would give inadvertently an impression that people get a slap on the wrist as harsh punishment is being called upon, as was done by, among others, David Beckham.”
There have been numerous calls for Blatter to step down as FIFA president following his remarks, but Sexwale feels the apology already issued by the 75-year-old is sufficient.
"Mr Blatter is well known, worldwide as a champion against racism and discrimination," he added.
"What he said was flippant, a mistake.
"He made utterings which were inadvertent, inappropriate and unfortunate and these will be dealt with by the FIFA executive, but the man has apologised."
