* Controversial former Ciudad Juarez mayor ahead in poll
* Some voters say government's anti-drug crackdown failed
By Robin Emmott
CIUDAD JUAREZ, Mexico, June 15 A former Mexican mayor whose chief of police was jailed for drug trafficking is running again for mayor in Mexico's most violent drug war city, Ciudad Juarez, and is the favorite to win.
Hector Murguia was mayor of the city across from El Paso, Texas, from 2004 to 2007. He denies any links to drug cartels and says he can cut killings in one of the world's deadliest places if he is elected on July 4.
A wealthy businessman, Murguia is accused by rival politicians, rights groups and drug trade experts of being in the pay of the city's powerful Juarez cartel, which is fighting the Sinaloa alliance for control of trafficking routes in a battle that has killed 5,500 people in the city since 2008.
Ciudad Juarez, a manufacturing city once known for its wild nightlife on the U.S. border, has become the bloodiest front in President Felipe Calderon's drug war. Tourists are too scared to visit and business leaders say U.S. investors are freezing investment in factories here until the killings subside.
Murguia's candidacy highlights how Mexico is still struggling with elections overshadowed by corruption claims a decade after the country ended 71 years of one-party rule.
Running for the opposition Institutional Revolutionary Party, or PRI, Murguia has never faced formal charges and denies any wrongdoing but critics say the arrest of his former police chief has generated deep suspicions.
Undercover U.S. agents caught the police chief, Saulo Reyes, trying to bribe a border guard in El Paso with almost $20,000 as part of a marijuana-smuggling racket in January 2008 and later sentenced him to eight years in a U.S. prison.
"Saulo Reyes never faced any charges while he was my police director," Murguia told Reuters in a recent interview. "Who would have thought that three months after the end of my administration he would be involved in trying to smuggle drugs into the United States?" he said in his wood-paneled office lined with expensive bottles of cognac, whiskey and tequila.
Murguia, known by his nickname "Teto," also faces accusations of a sharp increase in corruption in Ciudad Juarez's city police force during his time in office.
He says he was unaware of any increase. "It's very difficult to detect. It's something that happens in families where you are the last one to find out that your children are drug addicts," said Murguia, also a federal lawmaker.
BLOW FOR CALDERON?
Murguia's green campaign billboards line Ciudad Juarez's forlorn streets and many of the city's poor say they will vote for him with his promise of more jobs and better security.
A May 25 poll published by leading local daily El Diario found 42.6 percent of those canvassed said they would vote for Murguia, compared to 20.7 percent for Cesar Jauregui, the candidate for the ruling National Action Party, or PAN. The poll of 350 people between May 15 and May 19 by polling firm Confirme did not give a margin of error.
"He's got my vote because he helps people. He is giving out building materials for peoples' houses at his rallies," said a woman who gave her name as Marta, wearing a red Murguia campaign T-shirt in Ciudad Juarez's seedy central plaza.
A poll commissioned by the PAN put Murguia and Jauregui in a virtual tie with 35 percent and 37 percent, respectively, and with a margin of error of 4.4 percent.
Jauregui publicly accuses Murguia of drug ties. "I'm sure that Hector Murguia, through the appointments he made in the public security ministry during his term, was involved (in drug trafficking)," he told Reuters last week.
Political analysts say Murguia's support is partly because Ciudad Juarez residents are deeply disillusioned and angry with Calderon's anti-drug strategy in Ciudad Juarez.
Since 2008, the president has sent thousands of federal police and soldiers to defeat the cartels. But drug killings have escalated and rights groups accuse police and the army of extorting small businesses and moonlighting for the Sinaloa and Juarez gangs, which they deny.
"The federal government's strategy is totally worn out," said Hugo Almada, an analyst at the Autonomous University of Ciudad Juarez. "It's been in place for 2 1/2 years and it has failed to resolve the insecurity.
"Not a single business leader or politician has been arrested. Nothing has been done about money laundering and instead many poor young men have been arrested and are often mistreated in custody," he said. (Editing by Bill Trott)