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Mexico arrests head of teacher's union on fraud charges

Elba Esther Gordillo, leader of Mexico's teacher's union, attends an event in Puebla in this April 7, 2011 file photograph. Mexico on Februa
Elba Esther Gordillo, leader of Mexico's teacher's union, attends an event in Puebla in this April 7, 2011 file photograph. Mexico on Februa

By Gabriel Stargardter

MEXICO CITY (Reuters) - Mexico arrested the powerful head of the main teachers' union on fraud and embezzlement charges on Tuesday, striking out at a high-profile opponent of the new government's reform efforts and seeking to assert President Enrique Pena Nieto's authority.

Attorney General Jesus Murillo said Elba Esther Gordillo was arrested on suspicion of embezzling $200 million of union funds, laying out the case against her just a day after Pena Nieto signed into law a major education reform that Gordillo opposed.

Gordillo is accused of using intermediaries to move money to bank accounts in Switzerland and Liechtenstein, then back to the United States, in order to buy property in San Diego and pay for works of art and plastic surgery.

"Clearly, we're facing a case in which the money of education workers has been misused illegally for the benefit of various people, including Elba Esther Gordillo," Murillo said. "Under this government nobody is above the law."

Gordillo, 68, is known as the "The Teacher" in Mexico. She has led her union for more than two decades and was long a prominent member of Pena Nieto's centrist Institutional Revolutionary Party, or PRI.

She also became a symbol of alleged corruption in the country, drawing widespread criticism for her expensive clothes and lavish lifestyle.

Murillo said she used union money to pay bills of $3 million at luxury U.S. department store Neiman Marcus. Detailing the charges against her, Murillo said she had declared income of just 1.1 million pesos ($86,000) between 2009 and 2012.

He said other people involved in the suspected fraud included Gordillo's dead mother, the 99 percent owner of one of the companies used to move funds.

Gordillo was detained at Toluca airport near the capital on Tuesday evening along with three other people.

Her arrest mirrors the removal of her predecessor Carlos Jonguitud 24 years ago by then-President Carlos Salinas, who took office pledging ambitious reforms, similar to the changes Pena Nieto has vowed since taking office on December 1.

Salinas also ordered the dramatic 1989 arrest of Joaquin Hernandez Galicia, known as "La Quina," who led the union at Mexico's state-run oil giant Petroleos Mexicanos, or Pemex.

Hernandez was sentenced to 35 years in prison after soldiers raided his home, where they said they found about 200 Uzi submachine guns and 30,000 cartridges. However, critics say the weaponry was planted to frame Hernandez and he was eventually released in 1997.

Salinas was also a member of the PRI, the party which ruled Mexico for most of the 20th century and returned to power with Pena Nieto last year after 12 years on the sidelines.

Opponents of Pena Nieto raised the question of whether Gordillo's arrest might have been ordered for political reasons.

The conservative National Action Party, which ran Mexico between 2000-2012 and is now in opposition, said it hoped that the investigation "is managed responsibly, seriously, and without political ends."

UNION POWER

Gordillo has held a firm grip over the teachers' union, whose 1.3 million members make it one of the most powerful in Latin America.

She has long been viewed as an impediment to education reform in Mexico, and one of Pena Nieto's first acts in office was to push for a major revamp of the education system.

Gordillo's union fought against Pena Nieto's new education law, which aims to limit union control over hiring and teaching standards in a bid to improve school standards.

Pena Nieto also plans major changes to the Mexican tax system and state oil monopoly Pemex, a company with its own powerful union that has been accused of corruption.

The blow to Gordillo harks back to the days when the PRI governed under a strong presidency that brooked no dissent.

Gordillo, was born into poverty in the south of the country and started working as a teacher at 15.

Widowed at 18, she moved to Mexico City, befriended the union leader of the day and began her ascent through the organization's ranks. After Salinas became president in 1988, teachers' protests broke out over wages, and he turned to Gordillo to bring order, naming her union boss.

Gordillo was a heavyweight of Mexican politics and at one point led the PRI in the lower house of Congress. She quickly thwarted government efforts to decentralize education, give parents a bigger role and weaken the union.

But she fell out with PRI leaders ahead of the 2006 presidential election and founded the small New Alliance Party.

($1 = 12.8 pesos)

(Editing by Dave Graham, Kieran Murray and Jackie Frank)

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