The veteran Galatasaray boss was furious with official Svein Oddvar Moen after his side's 3-0 Champions League first-leg loss against Jose Mourinho's side at the Santiago Bernabeu
Madrid emerged victorious after goals from Cristiano Ronaldo, Karim Benzema and Gonzalo Higuain but the Gala boss believes that his side should have been given two penalties, firstly when Sami Khedira appeared to handle the ball before the interval and then when Burak Yilmaz was fouled in the second half.
"The referee was scared of Real Madrid's name. He's not a referee for this level," Terim fumed to reporters.
"If you can't see a penalty for handball, then he shouldn't be here. Everyone says penalty, but the referee - he says nothing. Real Madrid are the favourites for this tournament. It didn't happen for us. What can we do?
"Did he defeat us? No. He blew his whistle at some very interesting parts of the game. I haven't seen the penalty shouts, but everyone says it was a penalty.
"Real Madrid don't need referees but when they don't see what is there, you don't get anywhere. He also gave lots of wrong decisions. However, referees aren’t the subject of the conversation."
Despite the three-goal deficit, Terim refused to rule his side out of the tie, but he admits that progression will be tough.
"The goals we could have scored in the first half could have changed everything. We will work hard in the second game but Madrid are better-placed to go through," he added.
“I don't like talking about referees, I never talk about them, but the referee was awful."