File Photo: Hoshyar Zebari has been temporarily suspended from the presidential race. AFP
It was the second blow in 48 hours to Zebari's presidential drive, and the latest chapter in the war-scarred country's divisive politics.
The court said it had received a complaint from lawmakers that Zebari's candidacy was "unconstitutional" because of the graft claims, adding that his suspension was "temporary" while the court considers the case.
Zebari was one of two main contenders for the largely ceremonial post of president, which the 329-member parliament was to vote on Monday.
The other favoured candidate is the incumbent Barham Saleh.
Iraq's highest judicial body said the complainants consider that Zebari does not fulfil constitutional requirements that the head of state must have "a good reputation and integrity".
The court cited his 2016 dismissal from the post of finance minister by parliament "over charges linked to financial and administrative corruption".
Public funds worth $1.8 million were allegedly diverted to pay for airline tickets for his personal security detail.
Zebari, 68, has always denied all corruption accusations.
The complaint also cited at least two other judicial cases linked to him, including when he was the country's long-time foreign minister after the fall of dictator Saddam Hussein in the 2003 US-led invasion.
'Not A Consensus' Candidate
The court's decision is the latest chapter in Iraq's turbulent politics.
The scheduled presidential vote follows October legislative elections marred by the record-low turnout, post-election threats and violence, and a delay until final results were confirmed in late December.
The largest bloc in the Iraqi parliament now, led by powerful Shiite cleric Moqtada Sadr, announced Saturday a boycott of Monday's parliamentary session to elect the new president.
The bloc's parliamentary chief, Hassan al-Izari, told a news conference they will not attend, making a vote less likely although technically a quorum could be reached.
The presidency, with a four-year mandate, is by a convention held by a member of Iraq's Kurdish minority. Zebari is the candidate of the Kurdistan Democratic Party (KDP).
The rotund, moustachioed Zebari favours Western suits but hails from a major Kurdish tribe and fought as a peshmerga against Saddam's regime.
After Saddam's overthrow, he served an unbroken 2003-2014 term as foreign minister before taking up the finance portfolio from which he was sacked.
"Our withdrawal is a message to the Kurds, in particular to the KDP, for them to agree on a single candidate," a Sadrist MP told AFP, speaking on condition of anonymity due to the sensitivity of the issue.
The MP, whose bloc's triumph in the general elections has left Sadr in control of complex negotiations to select a new prime minister, said Zebari was "not a consensus" candidate.
"I have not been convicted in any court," Zebari said in a television interview on Friday night as the charges resurfaced alongside forecasts he would unseat Saleh, the candidate of KDP's rival in Iraqi Kurdistan, the Patriotic Union of Kurdistan (PUK).