They call her “The Teacher”. Now Elba Esther Gordillo, the union boss routinely described as Mexico’s most powerful woman, looks set to be taught a lesson herself after she was arrested for allegedly embezzling more than $156m (£103m) from her organisation’s coffers.

For more than two decades Ms Gordillo, 68, has been the leader of the 1.5 million-strong National Union of Education Workers (SNTE), Mexico’s teachers’ union and the largest labour group in Latin America. Wielding the power to deliver the votes of her members as a single bloc, she has exerted significant influence over governments.

The SNTE is thought to have a budget of tens of millions of dollars per year, and has long been plagued by rumours of corruption. Ms Gordillo’s monthly salary is around $6,000; the Mexican newspaper Reforma once asked how she could afford an outfit that included $1,200 shoes and a $5,500 purse.

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Ms Gordillo was arrested with three other people after disembarking from a private plane at Toluca airport near Mexico City on Tuesday.

Mexico’s Attorney General, Jesús Murillo Karam, said 200bn pesos (£103m) had been transferred from the SNTE to three private accounts in American and Swiss banks. Ms Gordillo has allegedly bought two houses in California; several works of art; $17,000 worth of plastic surgery; and spent $2.1m at a Neiman Marcus department store in San Diego.

“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,” said Mr Karam.

The arrest came a day after Mexico’s new President, Enrique Peña Nieto, signed into law a set of sweeping education reforms that Ms Gordillo had opposed. The changes are partly aimed at weakening her union’s control of the education system, lowest ranked of Organisation for Economic Co-operation and Development members.

Mr Nieto’s reforms would subject teachers to regular assessments and would address the issue of absent and deceased teachers continuing to receive pay.

Ms Gordillo was born in the poor Chiapas region of southern Mexico and became a teacher aged just 15. Widowed three years later, she moved to Mexico City to make her career as a union organiser. In 1989, she became president of the SNTE, long considered an unofficial wing of Mr Nieto’s Institutional Revolutionary Party (PRI), which governed Mexico for an unbroken 71 years until 2000.

Ms Gordillo led the PRI in the lower house of the Mexican Congress, but fell out with the party’s modernising leadership and in 2006 founded the small New Alliance Party, made up mostly of her own union’s members. Her legal team has yet to respond to the corruption allegations, though she has previously refuted similar accusations.