AVG, and most antivirus scanners, use heuristics engines for their searches. They look at file behavior. Anything that gets root access on an android device they will consider malware. It's not, just a false positive.
On a side note, as others have said, get rid of avg. TERRIBLE antivirus scanner, especially on windows. (They've gone steadily downhill since version 8.) Hogs memory, cpu time, and to be honest it doesn't seem to stop very much. The android version is different from the windows version, granted, but as a whole it's still as crappy.