The investigation of teachers union boss Elba Esther Gordillo and her associates "should continue until the final consequences," Mexican President Enrique Peña Nieto said.

Gordillo was arrested Tuesday at the airport in Toluca, a city on the outskirts of the capital, and was arraigned a day later on racketeering charges in connection with the alleged embezzlement of $157 million in union funds.

The law "applies to everyone equally, and no one can be above the law," Peña Nieto said in an address to the nation Wednesday night during which he never mentioned the powerful union boss by name.

The 68-year-old Gordillo is the leader of the SNTE teachers union, the largest union in Latin America, and was considered the most powerful woman in Mexico.

Peña Nieto's comments were his first on the case since the arrest of Gordillo, who allegedly used union funds to pay her personal expenses.

Gordillo's arrest has rocked the Mexican political system, in which she played a leading role for years and helped found the New Alliance Party, or PANAL.

The Attorney General's Office "has started legal proceedings against different people, resulting in an investigation that allows the presumption that different federal crimes were committed," Peña Nieto said.

Gordillo was informed of the charges against her during a hearing Wednesday inside the Santa Marta Acatitla prison on the outskirts of Mexico City.

The arraignment, which reporters followed via a closed-circuit feed 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 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.

Televisa reported that the union chief was arrested after arriving in the country from San Diego, California, where she owns property. EFE