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In the Cormanthyr forest, there is an area with Night hunters capable of draining levels from players:

With a bonecrunching sound a nighthunter's crush skillfully smashes your chest.
You have just lost a level!
You scream as a nighthunter draws your strength from you!
A nighthunter's touch steals your life energies!

I can't find any actual source for Dragazhar being able to do that, so I'm assuming it's just a matter of having been assigned the wrong race.

Edit: To clarify, the race is outlined in Monsters of Faerun p.18-19 with a CR of 1 and its only extraordinary ability being Frightful Presence.

Not a bug. These ones have it for a reason.