(re-ledes, updates throughout)


The leader of Mexico's powerful SNTE teachers union learned Wednesday that she and two associates face racketeering charges in connection with the alleged embezzlement of $157 million in union funds.

Elba Esther Gordillo was informed of the charges during a hearing inside the Santa Marta Acatitla prison on the outskirts of Mexico City, where she spent the night following her arrest.

The arraignment, which reporters followed via closed-circuit from another area of the prison, was broadcast live on national television.

The SNTE boss, along with co-defendants Isaias Gallardo and Jose Manuel Diaz, is to be held for at least 72 hours before the court addresses the question of bail.

Upon hearing about the racketeering charges for the first time, the woman once described by scholar M. Delal Baer as "Jimmy Hoffa in a dress" smiled slightly and looked upward.

Mexico's Finance Secretariat was notified by Santander bank in December - the month current President Enrique Peña Nieto took office - of suspiciously large transfers and subsequently launched an investigation that led to the discovery of the suspected diversion of SNTE funds for Gordillo's personal expenses.

Based on the initial probe, investigators believe the union leader received more than 2 billion pesos ($157 million) in embezzled funds via multiple transactions, Mexican Attorney General Jesus Murillo said.

The money was allegedly used to cover Gordillo's credit card bills, purchases at luxury stores, cosmetic surgery, real estate and other spending.

Gordillo was arrested at the airport in Toluca, a city on the outskirts of the capital, because "it had been announced that she was going to hold a (SNTE) congress," Murillo said Tuesday night.

Televisa reported that the union chief arrived in Mexico from San Diego, California, where she owns property.

The SNTE is the largest union in Latin America and Gordillo, 68, is considered Mexico's most powerful woman.

The union boss has the backing of the New Alliance Party, or PANAL, which holds 10 seats in Congress. EFE