I don't know if this is the one Anne Marie was thinking of, but here is a column where in part of it Yamada Sensei discusses failing people in tests.
"Just like other big seminars, we had a test for black belt and I must say it was a strict one because there were other Shihan beside myself sitting at the table. Believe me, they are tougher than I am. I wasn't joking when I said the same thing before. However, I think it is good to have more than one judge at the table for many reasons.
When I give a test, I want to pass everybody but it is not always possible. I want to be a nice guy, but when there is a reason for me to be a tough guy, I am. It is my responsibility to pay respect to the value of Black Belt, and to keep a standard of good quality for Black Belt. Please understand this. When I fail you, I don't fail you alone but your teacher as well. When tests are bad, you cannot find me after the test because I hide myself in my dressing room. I feel sorry to see the people who failed their test and, more than that, I don't want to hear the complaints from their teacher, which happens occasionally, although I understand that most parents love their kids and think they are the best.
It sounds like I'm asking too much if I say this but let me tell you what I'd like to hear from both students and teachers after their unsuccessful test. From the student's side, I would feel good if they say "Sorry I embarrassed my teacher. I'll do better next time if you give me another chance," and from the teacher I'd like to hear "Sorry I have embarrassed myself. I clearly see what my student needs to do to improve.""
And another one a few years back where he talks of the role of the teacher:
"As far as the last tests were concerned, they were very satisfactory. One thing I'd like to point out is that if you are sending your student to test, you - as the teacher - must attend the test. If you are not there, how could you tell if your student did well or not? And also as a teacher you should know that if your student has failed you should take the blame. So, the next time you send your student to a seminar to test, make sure your student is ready so as not to embarrass yourself."
Here's an old Aikido Online interview (1981) in which Yamada Sensei discusses testing: