The Italian manager resigned in February after Terry had the armband taken away from him by FA chairman David Bernstein after the player was charged by the Crown Prosecution Service for allegedly racially abusing QPR defender Anton Ferdinand.
Capello, who has recently taken over the reins of the Russian national side, has stated that this contravened a clause in his £6 million-a-year contract.
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"In England, with my contract, it was on paper who should be the captain. It was a decision for the coach. It was down on paper," Capello explained to reporters.
"If I had taken the team to the Euros it would have been even better, but the John Terry story meant I couldn’t go to the finals
"I achieved everything I wanted to achieve with England. I worked in England for four years and after everything that happened I was p****d off, so I wanted to stop.
"I was not given the opportunity to fight for the Euros with England because of everything that happened with John Terry.
"When you are told the goal and you are always interfered with, then you don’t feel well and are ill at ease.
"I wanted to become the main guy of the national team to take the team to Brazil in 2014. I wanted that again."
The situation led to the appointment of Roy Hodgson as his successor just a month before the start of Euro 2012, but the Italian stated that a gagging order stopped him from telling the full truth of the story behind the scenes.
"The contract with the English FA means I am forbidden to talk about the national team," he added. "I would like to, but I am bound by the clause in that contract. That’s why I cannot tell you anything else."
After being appointed as manager of the Russian national team, Capello, who struggled throughout his four-year spell in England to learn the language, has admitted that he is unlikely to learn Russian during his two-year contract.
"Russian is a difficult language to learn," the 66-year-old noted. "I will convey my message to the players with the assistance of a translator."