Man comes to planet to work on dispute between human colonists and another race. The other race captures some of colonists and performs horrible experiments on them and uses germ warfare. The problem escalates until he takes the remaining colonists off the planet and calls for an attack from Earth ships that ends up destroying the whole planet.

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    Welcome to the site. I edited the title - this is the second post of yours I have done so to in as many minutes. It is most helpful to put some basic information in the title; as they were, they provided nothing for a potential answerer. – Tritium21 Jan 23 '15 at 20:32

I'm answering my own question here, but the story I described is Transstar by Raymond E. Banks.

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