Many journals have a policy that all authors must approve of the paper for it to be published, and if any authorship changes (for example, adding or removing authors) occur between submission and publication, all authors must agree to it. If you had submitted the paper with his name as a co-author, he might have been able to try to use that as leverage to block the paper from getting published in that journal.
Since you haven't submitted it yet, the situation is a bit better, but still very messy:
(1) If it is possible to remove his contribution and publish the paper without him as a co-author, the journal is very unlikely to let him block your paper, but this might make him angry, and since he was your former PI when you were a student, this might not be a good idea. Pissing off your former supervisor can sometimes be harmful to your career (for example when you apply for things, your former supervisors can often be contacted informally, even if you haven't listed them for a letter of reference). So preferably, you won't have to do this.
(2) If his contribution was essential to the paper (i.e. cannot be taken out), if you submit the paper without him as a co-author he could file an academic integrity complaint at your institution (or with the journal if you don't have an institution). If his contribution was essential, he would hopefully win in this academic integrity investigation. So I highly recommend not to do this.
So what can you do that doesn't jeapordize your career?
Two options that are better for your career in the long-term (despite not looking better in the short-term) are to:
(3) Try to discuss the situation with the other professor, in a professional and adult-like way. Perhaps get the other co-authors on your side and get the senior-most one to do the talking (you said there was another professor involved).
(4) Take a sacrifice and make a compromise with yourself: your long-term career may be more important than the short-term gains this paper provides right now, so maybe you can accept the cost of having to avoid publishing this paper, in exchange for the benefits of maintain a good relationship with this professor who you said is "powerful and famous". Hopefully the "powerful and famous" professor would be able to include you on the subsequent paper. While this is not ideal, it would not be necessary if you are successful with your attempts in option (3).
So option (3) is the best option here, and if it doesn't work then I would in many cases recommend option (4). The third and fourth best options would be (1) then (2) respectively. No option is perfect for you in the short-term, unfortunately. This is academia.
- I personally have settled with option (4) many, many, many times.
- I can't count the number of times I did not publish something because a more powerful academic preferred to wait (even though that academic did not need to be a co-author.