Hair said on Wednesday he had started legal action against the International Cricket Council (ICC) and the Pakistan Cricket Board (PCB) after he was removed from the elite panel of umpires last year.
The ICC and the PCB have brushed aside Hair's claims of racism and said they will vigorously defend the matter.
"Hair is seeking publicity through this racial charge and will come up with a book in the near future," said Nawaz, who took 177 wickets in 55 Tests for Pakistan in the 1970s and 1980s and was known as the pioneer of reverse swing.
"Hair offered to resign for money, which showed he has no pride but seeks money. Through his off- and on-field actions he has stained the image of umpires," said Nawaz, referring to Hair's offer to resign for 500,000 dollars after the Oval incident in August last year.
Hair, together with West Indian umpire Billy Doctrove, penalised Pakistan five runs on the fourth day of the fourth Test against England at The Oval because they believed ball-tampering had taken place.
Pakistan were so incensed that they did not take the field after tea with the umpires, who awarded the match to England on the grounds Pakistan had forfeited the game -- the first time this had happened in Test history.
Hair is now only allowed to officiate in matches between non-Test nations. He completed his first assignment in the ICC League on Wednesday in Kenya, where he announced his decision to sue.
Former Pakistan umpire Mahboob Shah believed Hair was half right and half wrong.
"Hair's charge of racism is wrong. But he is right in asking why no action was taken against Doctrove, because both the umpires are equally responsible in a match," said Shah.
"It was through consensus that the tampering charges were levelled against Pakistan and both umpires jointly awarded the match to England," said Shah, who officiated the final of the 1987 World Cup.
Shah said Hair's history of controversial umpiring had led to his removal.
"The ICC had a lot of complaints against Hair and the Oval issue put fuel on an already lit fire and he was removed on past reputation."