Whistleblower gets record $24 million for exposing Hyundai and Kia’s safety lapses

The US auto safety regulator announced on Tuesday its first-ever reward to a whistleblower, handing out more than $24 million to a former Hyundai employee who provided key information about safety lapses at the South Korean carmaker.

The award to ex-Hyundai Motor engineer Kim Gwang-ho is the biggest ever in a whistleblower case in the auto sector globally, according to law firm Constantine Cannon, which represented Kim.

It comes as the US regulator, the National Highway Traffic Safety Administration (NHTSA), and the US Department of Transportation prepare to propose regulations related to an automotive whistleblower program Congress created in 2015.

Kim reported to NHTSA in 2016 that Hyundai was failing to address a design flaw linked to its Theta II engines, which were prone to seizing up and even catching fire.

“This award is the maximum percentage allowed by law,” NHTSA said in a statement announcing the award.

“Whistleblowers play a crucial role in bringing information to NHTSA about serious safety problems that are hidden from the agency,” said Steven Cliff, NHTSA’s Deputy Administrator.

Citing an internal report from Hyundai’s quality strategy team to management, Kim had told NHTSA the company was not taking enough action to address an engine fault that increased the risk of crashes.

NHTSA found that Hyundai (HYMTF) and its Kia subsidiary had delayed recalling affected vehicles, and that the automaker had provided inaccurate information about the problems.

In 2020, Hyundai and Kia’s US units agreed to a record $210 million civil penalty after NHTSA said they failed to recall vehicles for engine issues in a timely fashion.

“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 US’s legal system had a program in place to make this possible,” Kim said in a statement on Tuesday.

“I hope my reporting leads to real safety improvements, both at Hyundai and throughout the industry,” he added.

In 2017, US safety regulators began to investigate if the recalls had covered enough vehicles and were done in a timely fashion. That followed the concerns reported by Kim to the US auto safety regulator.

The payout to Kim is the first under the US Motor Vehicle Safety Whistleblower Act, passed by Congress in 2015 to create a whistleblower reward program in the Department of Transportation for industry insiders who provide information to safety regulators about defects in vehicles.

(Reuters)