First it was the truckers caught paying bribes and pocketing millions in city contracts. Then it was the white businessmen who set up front companies to win minority contracts. Then came charges that employees in the water department got raises for working on political campaigns.

Mayor Richard M. Daley has suffered bad news aplenty since soaring into his fifth term with 79 percent of the vote, but none as troublesome as this week's federal corruption indictment of two close associates, including the leader of the City Hall patronage operation.

Federal investigators charged that the hiring system was thoroughly rigged.

One political organizer was picked for a job although he died before interviews were held. Another was hired over objections that he was a "drunk." A third won a promotion although he was in Iraq when the interview supposedly took place. He scored a perfect 5.0 anyway.

Allegations of favoritism and corruption have not reached Daley, who told reporters: "I don't play any role in hiring, no, I don't. I never have." Yet his popularity is falling, a potential political rival is criticizing him and federal investigators are making it clear they are not yet done.

"Now is the time to cooperate, because this train is leaving and you're either on the train or you're on the tracks," Robert Grant, head of the FBI's Chicago office, said this week. An affidavit unveiled this week against patronage boss Robert Sorich mentions 22 cooperating witnesses.

Daley responded Thursday by proposing that all hiring for the city's 37,000 nonpolitical jobs be handled by an outside office to be called the Independent Public Service Commission. The mayor talked of "mixed feelings" about changing the system, saying that "only history will judge if this represents progress in the city of Chicago."

In all, 30 people have been charged and 21 have been convicted in the corruption investigation.

"Every single city personnel decision will be subject to criminal investigation and potential prosecution," Daley said in a reference to the ongoing investigation. "I do not want to put any city employer doing their job in that position. The only alternative is basically to move all hiring and promotion out of City Hall, period."

For 22 years, city hiring has been governed by a consent decree that prohibits political hiring for all but about 900 city employees. A federal judge last year rejected arguments by Daley administration lawyers that it was too burdensome.

Prosecution documents filed in court allege that high-ranking members of Daley's staff routinely violated the civil decree, as well as federal law. U.S. Attorney Patrick J. Fitzgerald charged that the system was riddled with fraud, but in an interview he would not say whether evidence indicates that Daley was aware of the alleged crimes.

"We're making no allegations about anyone not charged in the complaint," said Fitzgerald, who is also leading the investigation into the leak of Valerie Plame's identity as a CIA operative.

For Daley, widely credited with improving public services and the city's fractious racial climate, the blows to his credibility seem to be falling harder.

"It's like the water has risen from his chest to his neck," political consultant Don Rose said. "This is the guy who drives down alleys looking for ruts and he doesn't know what's going on down the hall from him with the guy who's responsible for patronage?"

"What we've got," said Rose, referring to Sorich, "is a guy who was directly responsible to Daley, appointed by Daley, Daley knows his family. You can't get any closer, short of one of the Daley brothers."

Sorich's father was an official photographer for Daley's father, imperious longtime Chicago mayor Richard J. Daley. Sorich and his co-defendant, Patrick Slattery, an administrator in the streets and sanitation department, both are 42 and come from the Daley family's political power base in the South Side neighborhood of Bridgeport.

Sorich sometimes rode to work with Daley's brother John, a Cook County commissioner. Slattery married one of Richard Daley's personal secretaries. After their arrests, Daley said he was "personally saddened."

Adding to the political intrigue, Rep. Jesse L. Jackson Jr., a Chicago Democrat, has emerged as perhaps the mayor's sharpest critic. He is doing little to quash speculation that he may run for mayor in 2007.

Jackson said of Daley: "It's hard to be a detail mayor and a hands-on mayor, which is what he has a reputation for being, and then to say he knows nothing. Which raises the question 'Who's running our town?' "

A Chicago Tribune poll in May showed Jackson in a statistical dead heat with Daley, with 23 percent undecided. The survey, conducted before the most serious allegations surfaced, showed Daley with an approval rating of 53 percent, a majority but the lowest level since he became mayor in 1989.

Ricardo Munoz, an alderman on the near South Side, said this is a key period for the 63-year-old mayor.

"Voters aren't holding him personally accountable just yet, but it's getting awfully close to that," Munoz said. "It's a Dr. Jekyll-and-Mr. Hyde thing. They love the mayor for his flowerpots and clean garbage cans, but when they start to hear about corruption, they turn on him very fast."

Cindi Canary, director of the Illinois Campaign for Political Reform, said the scandals have "done a lot of damage to Daley."

"Many of us are expecting a lot more indictments. We're expecting it to go higher until it gets to the mayor," Canary said.

But she added: "The mayor, to his credit, when these things happen does . . . fire people and changes things around." She also questions Jackson's viability.

"It depends on a lot of stars aligning," she said. "He really needs to look to building a political organization within the city. He would appeal to large segments of the public, but he's also, while in Congress, oriented more to the south suburbs than the city."

David Axelrod, one of Daley's closest political consultants, said the mayor's political future "will be determined by the good works he has done in the city for the last 16 years."

"People in Chicago," Axelrod said, "are not going to say 'Stop the presses!' to know that there is politics in government."

Documents in the patronage case allege a vast fraud. An affidavit signed by U.S. Labor Department investigator Irene Lindow said Sorich and his "co-schemers" conducted sham interviews and inflated the results, often rejecting more qualified candidates. Loyalty to certain political groups, aldermen and labor unions tended to be decisive.

Staff writer Kari Lydersen contributed to this report.

Mayor Richard

M. Daley