Gordillo, 68, was arrested along with three other people Tuesday at the Toluca airport near Mexico City, and is set to appear before a judge.

At a press conference shortly after her arrest, Attorney General Jose Murillo Karam said the Finance Ministry's financial analysis unit detected unusual activity that led to the discovery of multiple operations worth around 2 billion pesos ($156 million, 119 million euros) from accounts belonging to the National Union of Education Workers.

According to Murillo, union funds were used to make multiple purchases, including $17,000 in plastic surgery bills, shopping at luxury stores and a million-dollar home in San Diego. Additionally, $2 million also made it into accounts in Switzerland and Liechtenstein.

"We are looking at a case in which the funds of education workers have been illegally misused, for the benefit of several people, among them Elba Esther Gordillo."

Prominent politician

Since 1989 Gordillo has led Mexico's teachers union, which has some 1.4 million members and is among the largest in Latin America. Known for leading an opulent lifestyle, she was also the former secretary general of the Institutional Revolutionary Party (PRI), and Mexico's most prominent female politician.

She was expelled from the PRI in 2006 and went on to form her own New Alliance party, which was considered key in former President Felipe Calderon's election victory and maintained a strong partnership with his administration.

When current President Enrique Pena Nieto came to power in December, it marked a return to power for the PRI, which had previously ruled Mexico from 1929-2000. Since taking office, Nieto has been at odds with Gordillo – a powerful figure many Mexican politicians had refused to take on for years.

Gordillo's arrest comes a day after the enactment of a law aimed at improving education standards that she opposed

dr/ipj (AFP, AP, Reuters)