A former Korean safety engineer with Hyundai Motor Co. will receive the first whistleblower award from the National Highway Traffic Safety Administration (NHTSA): A $24.3 million payment for information regarding engine safety issues in 1.6 million Hyundai and Kia vehicles sold in the United States.
Hyundai Motor America and Kia Motors America paid $210 million combined in 2020 to settle claims the companies failed to report engine safety defects to the NHTSA in a timely fashion, as is required under the Safety Act. Of that $210 million, $81 million was paid in cash to the U.S. government.
Tuesday’s whistleblower payout represents the maximum 30 percent of that $81 million allowed under the NHTSA’s whistleblower program, which is modeled on the success of similar programs at the Securities and Exchange Commission and Internal Revenue Service.
In 2016, Kim Gwang-ho first came forward with information to the NHTSA about safety issues with Theta II engines in Hyundai and Kia cars. The engines were prone to seize up and even catch fire, according to a press release from Kim’s legal representatives, Constantine Cannon.
“I am pleased that I have been justly compensated for the risks I took to protect owners of these defective cars and grateful that the U.S.’s legal system had a program in place to make this possible.” Kim said in the release. “I hope my reporting leads to real safety improvements, both at Hyundai and throughout the industry.”
The award is the largest paid to an automotive whistleblower, said Constantine Cannon.
“Whistleblowers play a crucial role in bringing information to NHTSA about serious safety problems that are hidden from the agency,” stated Dr. Steven Cliff, the agency’s deputy administrator. “This information is critical to public safety, and we are committed to rewarding those who bring information to us.”
A spokesman for Hyundai said the company “takes safety seriously and fosters a culture of transparency and accountability.” In 2019, Hyundai Motor North America created the role of chief safety officer, who is “responsible for infusing and enforcing the highest standards of motor vehicle safety throughout the organization,” the company said.
Congress passed the Motor Vehicle Safety Whistleblower Act in 2015, establishing a whistleblower program at the NHTSA. Six years later, the agency is still in the process of drafting rules for the program. Even without the rules, whistleblowers with information about violations of the Safety Act by auto and auto parts manufacturers, contractors, and auto dealers can supply the agency with information and receive an award.
Ari Yampolsky of Constantine Cannon said auto safety concerns like those at Hyundai and Kia might not have been brought to light without Kim’s inside information. He said Kim learned about the NHTSA whistleblower program through informational materials provided to him at work. He flew from South Korea to Washington, D.C. with a briefcase of incriminating internal corporate documents, at his own expense, to alert regulators to the problems with the engines and the companies’ efforts to cover them up. His college-aged daughter accompanied him and acted as his translator.
“Inside information is absolutely critical in many of these cases. Someone has to step up and bring it to regulators,” Yampolsky said. “Auto industry employees everywhere need to know: If your employer sells unsafe vehicles in the United States, NHTSA wants to hear from you and can pay you a financial reward for exposing misconduct.”