Lazaroff denied the allegation and said he did little more than recommend people he knew to be qualified.
Another issued raised by Senator Grassley was reports that Lazaroff had retaliated against suspected whistleblowers.
"He threatens them as an administrator can threaten underlings," Grassley said.
Lazaroff denied the allegations, which he blamed on "disgruntled employees."
The US Postal Inspection Service rarely gets the credit it deserves, according to federal prosecutors who work with all federal law enforcement agencies.
Postal inspectors are charged with investigating scams and thefts through the mail and are often called in to work on complicated financial cases in which documents have passed through the mail.
Postal inspectors helped bring down tele-evangelist Jim Bakker, pursued the Unabomber Ted Kaczynski and were deeply involved in the anthrax investigation.
Until the ABC News interview, conducted at the Postal Service headquarters in Washington, D.C., the U.S. Postmaster General John E. Potter had been highly supportive of Lazaroff and his spokesperson, Gerry McKiernan, sought to downplay the allegations.
McKiernan told ABC News earlier this month that an "internal" investigation had already cleared Lazaroff and that the Inspector General's report would also find no wrongdoing.
McKiernan also said the complaints against Lazaroff were due largely to "disgruntled employees" who objected to management changes Lazaroff had implemented.
Thursday, Potter praised Lazaroff saying he "has demonstrated a powerful focus on operational excellence and an unwavering commitment to this organization." Potter, or his deputy, according to postal inspectors, had approved all of Lazaroff's many travels.
Senator Grassley said the matter raised questions about the Postmaster General's judgment.
"And it's that attitude that there's nothing wrong that's part of the culture of the agency, that we're going to protect ourselves."
Lazaroff's retirement as Chief Postal Inspector is effective November 3. No successor has yet been named.