Nov 10, 2021 - Economy & Business

U.S. auto safety regulator awards over $24M to Hyundai whistleblower

Photo of a blue Hyundai car on display on the right and a dark green Hyundai car on the left
Hyundai Casper mini sport utility vehicles displayed at Gwangju City Hall. Photo: SeongJoon Cho/Bloomberg via Getty Images

The U.S. government's auto safety regulator announced Tuesday it would award over $24 million to a former Hyundai employee who reported key information about safety defects.

Why it matters: Engineer Kim Gwang-ho provided evidence that Hyundai and sister company Kia were hiding a design flaw that was causing engines to seize and catch fire, according to law firm Constantine Cannon, which represents Kim.

  • It's the first time the U.S. regulator, the National Highway Traffic Safety Administration (NHTSA), has awarded a whistleblower.

Details: After Kim brought forth evidence in 2016, the NHTSA found that Hyundai and Kia delayed recalling over 1.6 million vehicles and gave regulators inaccurate information about the defects.

  • In November last year, Hyundai and Kia agreed to pay combined penalties of $210 million, $81 million of which went to the U.S. government.
  • Both companies also committed to "substantial organizational improvements," the NHTSA said.
  • Kim told the Wall Street Journal that Hyundai fired him shortly after he reported his concerns and filed a police complaint against him for allegedly leaking business secrets.

What they're saying: "Whistleblowers play a crucial role in bringing information to NHTSA about serious safety problems that are hidden from the agency," NHTSA Deputy Administrator Steven Cliff said in a statement.

  • "This information is critical to public safety and we are committed to rewarding those who bring information to us."
  • "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 a statement.
    • "I hope my reporting leads to real safety improvements, both at Hyundai and throughout the industry."
  • "This is an important award — not just for Mr. Kim, but for the automotive industry as a whole," Constantine Cannon attorney Ari Yampolsky added. "It is another step in the internationalization of efforts to root out fraud and corruption."

The big picture: The NHTSA and the Transportation Department are preparing to propose rules for the automotive whistleblower program.

  • Under the program, which Congress established in 2015, whistleblowers are allowed up to 30% of any collected monetary sanctions that result from their reports.
  • Kim's $24 million award is the maximum percentage allowed by law, according to the NHTSA.
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