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UPDATE 3-Avianca's majority shareholders arrested in Brazil on accusations of corruption

(Recasts with confirmation from authorities)

BRASILIA/SAO PAULO, Aug 19 (Reuters) - The majority shareholders of Colombia’s Avianca Holdings, brothers German and Jose Efromovich, were arrested in Brazil by the country’s federal police on Wednesday as part of the sprawling Car Wash corruption probe, authorities said.

Prosecutors have accused the brothers of laundering money and bribing public officials in order to land ship-building contracts with Transpetro, the logistics unit of Brazilian oil company Petrobras. The accusations are unrelated to Avianca.

German Efromovich, formerly the chairman of Avianca Holdings, did not respond to a text message seeking comment. Jose Efromovich could not be reached for comment.

The judge handling the case ordered the brothers to be detained and put on house arrest. The two will wear electric monitors and be forbidden from leaving Brazil.

The judge said there was reason to believe that the two had created a corporate structure in Brazil and abroad to launder money, costing public coffers some 610 million reais ($111 million).

The Efromovich brothers grew up in Brazil, with family origins in Bolivia and Poland. German Efromovich is also a Colombian citizen.

They initially built their fortune through contracts with Petrobras and other oil companies in Rio de Janeiro, using the profits to buy Avianca out of bankruptcy in 2003.

They built Avianca up into the second largest airline business in Latin America, large enough to lure United Airlines Holdings in 2018 to seek a partnership with Avianca.

United lent the Efromovich brothers’ holding company, Synergy Aerospace Corp, almost $500 million. But Synergy defaulted on the loan soon after, and U.S. carrier used the default to oust the Efromovich brothers from Avianca in May of last year and replace the board.

The Avianca-branded subsidiaries in Brazil, Argentina and Peru have all folded since last year, while the Colombian carrier is going through bankruptcy restructuring.

Avianca Holdings declined to comment. The Efromovichs retain a majority stake of just over 50% in the now-bankrupt company but do not have voting rights.

$1 = 5.5153 reais Reporting by Ricardo Brito and Marcelo Rochabrun; Additional reporting by Luis Jaime Acosta Editing by Bernadette Baum and Rosalba O’Brien

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