UPDATE 1-Brazil's Lula sends anti-fraud bill to Congress

* Bill imposes fines on companies bribing officials

* Proposal welcomed but approval in Congress uncertain

* Brazil under pressure to crack down on corruption

(Updates with formal proposal of bill)

By Raymond Colitt

BRASILIA, Feb 8 (Reuters) - Brazil's President Luiz Inacio Lula da Silva proposed to Congress on Monday a bill aiming to crack down on companies that bribe public officials.

The bill presented by Lula in a public ceremony follows years of international pressure for Brazil to honor commitments it made when it signed United Nations and OECD conventions on corruption.

Under the legislative proposal, a company caught bribing domestic or foreign public officials would pay a fine of 1-30 percent of its gross income and could even be shut down, the president's office said in a statement.

Currently companies caught paying off domestic or foreign officials are simply banned from bidding for future government procurement contracts.

The bill would also prevent individuals convicted of fraud from founding a new company and be able to again bid for government contracts.

Officials of some multinational companies operating in Brazil privately complain that they are at a disadvantage because local companies are not bound by tough anti-corruption laws.

"It's been a thorn in relations with other countries," said Claudio Abramo, executive director of Sao Paulo-based Transparencia Brasil, a domestic anti-corruption advocacy group.

"The bill won't end corruption but it will make it costlier for companies to practice or tolerate it," he added.

CORRUPTION SCANDALS

The Lula administration itself has been dogged by a series of corruption scandals. Several of Lula's closest advisors have been forced to step down due to allegations of racketeering and fraud.

Lula, a former union leader, was himself close to facing impeachment proceedings in 2005 because his Workers' Party had run an illegal campaign financing scheme.

Critics say Lula has often turned a blind eye to corruption to maintain cohesion in his governing coalition and question why he waited seven years in office to present the bill.

Still, the influential Brazilian bar association, OAB, welcomed the proposal, saying not only those receiving bribes but also those offering them should be punished.

"It's fundamental to have effective punishment on both sides," said OAB president Ophir Cavalcante, adding that corruption was the biggest challenge Brazil faced.

Brazil ranked 75th of 180 countries in the Corruption Perceptions Index published by Transparency International, the global anti-corruption group.

Despite Lula's majority in Congress, approval of the bill is uncertain.

With legislators soon to campaign for the Oct. 3 general election and the soccer World Cup to capture public attention from mid-June, the window of opportunity to approve the bill is shrinking.

Congress itself is frequently the scene of high-profile fraud and embezzlement scandals. Last year numerous legislators were found to use tax money to take their families on leisure trips. The head of the Senate admitted he received a generous housing subsidy he was not entitled to and failed to declare a mansion to election authorities.

Opinion polls show that only 1-3 percent of Brazilians trust their national legislature.

(Editing by Cynthia Osterman)