By on November 9, 2021

The National Highway Traffic Safety Administration (NHTSA) has announced it is making its first ever whistleblower award. The U.S. regulatory body has decided to give over $24 million to a whistleblower providing information related to Hyundai Motor America and Kia Motors America. While not named by the NHTSA, it’s undoubtedly talking about Kim Gwang-ho — a South Korean engineer who flew to Washington in 2016 to squeal that his employer had been skirting safety regulations.

Armed with an internal report from Hyundai’s quality control team, Kim told the NHTSA the company was not taking sufficient action to address a presumed engine defect that increased the risk of crashes. It looks like the decision paid off for him, too. Hyundai Motor Group was struck with sizable regulatory penalties and Kim is now getting a huge payout from U.S. regulators right before the Department of Transportation proposes updated regulations pertaining to the automotive whistleblower program Congress created in 2015. 

From NHTSA:

The whistleblower provided NHTSA with information related to Hyundai and Kia’s violations of the Safety Act. In November 2020, NHTSA issued Consent Orders with Hyundai and Kia reflecting the agency’s assessment that both Hyundai and Kia conducted untimely recalls of over 1.6 million vehicles equipped with Theta II engines and inaccurately reported crucial information to NHTSA about the nature of serious defects in the engines. The combined penalties in the Consent Orders amounted to $210 million, $81 million of which was paid in cash to the United States government. By statute, NHTSA may award a maximum of 30 [percent] of collected monies to a whistleblower found to contribute significant information to an action that results in penalties of more than one million dollars.

“Whistleblowers play a crucial role in bringing information to NHTSA about serious safety problems that are hidden from the agency,” elaborated Dr. Steven Cliff, NHTSA’s Deputy Administrator. “This information is critical to public safety and we are committed to rewarding those who bring information to us.”

Safety regulators have also said that the NHTSA has been working to improve its protocols for whistleblowing, claiming that it would become an invaluable tool for ensuring the industry is on its best behavior moving forward. This includes a provision from the Vehicle Safety Act that ensures whistleblower confidentially while also allowing the agency “to pay a monetary award to a whistleblower whose information leads to the successful resolution of an enforcement action for violations of law.”

Though we already know it was Kim Gwang-ho, who has openly stated he was pleased with the compensation provided by the U.S. government.

The NHTSA and DOT have said they would like to see recalls handled in a more timely fashion and institute penalties for automakers that were dragging their feet on fixes. Hiring employees to tattle on their bosses is undoubtedly an effective way of accomplishing this and it’s assumed that U.S. regulators will be leaning into the tactic now the NHTSA has issued the largest-ever reward for being an industrial informant.

Regulations can help keep automakers (who are always looking for ways to reduce costs) from doing something dangerously selfish. But they’re also capable of abusing their power and overreaching to a point where they become part of the problem. This time around, things seem to be on the level. But one wonders about the long-term ramifications of a government regulator effectively buying the truth so it can financially penalize industry players. Regardless, knowing that your staff could easily decide to cash in with the NHTSA should be an effective deterrent. Hopefully we’ll see this program handled fairly.

If you’re working at an automaker and would like to rat them out for something, The NHTSA has recourses available explaining what kind of shenanigans it’s interested in and how you can protect yourself legally.

[Image: dragon_fang/Shutterstock]

Get the latest TTAC e-Newsletter!

32 Comments on “NHTSA Gives Hyundai Safety Whistleblower $24 Million...”


  • avatar
    slavuta

    As long as this is not coming from taxpayer money, I am fine with it.

    • 0 avatar
      Crosley

      But it does come from the taxpayer, a company gets fined by the government to pay this person, those fines that would go to the Treasury are diverted to this person. And then those costs get passed on to the consumer. How is that any different than a tax? We’re bankrolling snitches some insane money.

      It’s a sort of perverse incentive and every disgruntled engineer is going to be able to find something to rat on and try to hit the lottery.

      I could see some merit in a program like this for very serious things and maybe a more reasonable incentive program. Not Fu#k you lottery money, this defect doesn’t sound all that dangerous to be honest.

      We also don’t all agree on what’s a safety defect, there’s still people that think Toyota had an unintended acceleration issue even though multiple scientists proved it was nonsense and basically just ambulance chasing lawyers looking for a payday.

      • 0 avatar
        el scotto

        @Crosley Sir, there is no direct evidence the costs are passed on to the the consumer. Those consumers would be H/K customers, so not everyone would be paying.

        It’s not a perverse incentive at all. I used to help run my family’s structural steel company. Do you want to drive over a bridge or work in a building where the engineers cheated? Engineers have a moral and ethical duty to report bad engineering.

        If a building or bridge fails due to poor engineering or construction practices the accident victims do get F-you lottery money.

        There are enough lawyers on here to comment on what goes on in a lawyer fight. Sometimes it’s just easier to settle than litigate. Those lawyers charge money too.

        • 0 avatar
          Crosley

          Are you trying to gas light people?

          It’s common sense if you raise a tax or fine, those costs trickle down to a consumer.

          If you assess hundreds of millions in fines and have an incentive system that rewards employees for finding more ways to get their company fined in order to line their own pockets, it’s going to raise the cost of the end product.

          • 0 avatar
            Stanley Steamer

            Then it’s a good thing Hyundai/Kia doesn’t have a monopoly on…cars.

          • 0 avatar
            jpolicke

            There’s an easy way to avoid the costs of the fines: don’t try to bury your defects and drag your feet on announcing a recall.

          • 0 avatar
            el scotto

            @Crosley When a company is fined it has to pay the fine in full on the date the government states. One company writes a big fat check. That one company may try to raise prices on their products to recoup the money paid for the fine. However, their competitors didn’t have to pay a fine and do not need to attempt to raise prices for a fine they never had to pay. The cost may or may not trickle down to the consumers that buy products from the one company that got fined.

      • 0 avatar
        jpolicke

        I see no evidence that the cost of compliance fines gets passed to the consumer and not the executive board and the stockholders. A company can’t jack up the price of its products when it has to compete with other players.

        The government got $81 million in cash fines. They obviously didn’t spend that much to investigate and prosecute Hyundai. So they’re foregoing $24 million of that in order to reward the individual without whose assistance they might not have had a case at all. This is the same reasoning that says the government might not be able to afford “spending” money on a tax cut.

        • 0 avatar
          slavuta

          81M is what? Selling like 3000 cars? This is when total H-K sales are around 6 million….

          I think, this is all built-in from the start. May be not in a way you feel it. But added $100 to your car will bring $600,000,000. All is well.

  • avatar
    SCE to AUX

    It’s interesting that a blown engine is considered a safety defect. I guess it’s a second-order cause for peril, so it qualifies. Blowing up the engine doesn’t hurt anybody directly, but being stranded or struck in traffic could be hazardous.

    Given the rising rate of recalls lately, this award will incentivize engineers of auto mfrs and suppliers to hunt for coverups. One utterance of “I’m not so sure about that” or “Let’s wait to gather more data” could be construed as a coverup awaiting a payday.

    Engineering is often about careful deliberation and statistically-meaningful data-driven decisions, not jumping straight to change orders. But Hyundai was definitely wrong in this case, and should have caught the issue before it got out of control.

    • 0 avatar
      el scotto

      @SCEtoAux Sir, I politely disagree. I would consider a blown engine in rush hour traffic in a big city a major safety defect. Never mind the B&B blowhards boasting that they can make it to the shoulder in any emergency situation. For us non-B&B types, doing 60 in the third lane of the beltway during rush hour and blowing an engine would both: A. make someone’s anus compress tighter and B. cause beseeching to the deity of their choice. I’d hit my flashers and hoped no one hit me.

      • 0 avatar
        SCE to AUX

        Maybe you missed this phrase: “being stranded or struck in traffic could be hazardous.”

        I’ve had the exact scenario you described happen to me, when the ECU on my car failed one night (85 LeBaron GTS), without warning. It was all I could do to get off the road from the 3rd lane to the right hand shoulder. That wasn’t fun.

        My point is, a blown engine is not a first-order safety issue like a Takata airbag, yet it is considered serious enough to award big fines and big whistleblower payouts.

      • 0 avatar
        Crosley

        If stalling out is a safety defect, how come we design cars to do that on purpose at every stoplight in order to save fuel?

        The government gets to do whatever it wants when it screams “safety!”

        I don’t like seeing cars poorly designed, but this really sounds like a shakedown under the guise of “safety first” to me.

  • avatar
    dukeisduke

    Those metal shavings in the crankshaft oil passages have cost Hyundai/Kia a pretty penny.

  • avatar
    dukeisduke

    I’d rather see the whistleblower given $1 million, then the other $23 million given to the owners of the vehicles.

    My oldest daughter’s 2012 Forte Koup (2.4l Theta II) falls under the recall, but she’s already at 154,000 miles, so she’s past the 150k where an engine repair or replacement would be covered. We’re just hoping her particular engine won’t have the problem.

    • 0 avatar
      ravenuer

      Agree with you. 24 mil is way too much.

    • 0 avatar
      jmo

      His career is over – $1 million isn’t going to make him whole. After taxes and legal fees $23 is probably $10. At 3% that’s 300k a year. So maybe his salary if he made it to senior director. Seems pretty fair considering the risk he took.

      • 0 avatar
        brn

        He did what was right. I do what’s right all day long and I don’t expect big money for it. I expect to be able to sleep at night.

        The maximum federal income tax (unless Biden gets his way) is 37%. Add 8.5% for an average of whatever State applies and he walks away with $12.65 million for doing what any of us should do.

        For $1 million, I’d gladly do the right thing and find a new job.

  • avatar
    jalop1991

    so, where is the indignation from those who declared that they would never buy another VW product ever again because “cheaters!”?

  • avatar

    American dream is not dead after all! Only in America you can make 24 mils like that. Giving award is not enough. they have to give him also citizenship or green card with identity change so he can hide from Korean mafia in USA

  • avatar
    conundrum

    Well, besides chuckling over the lunacy of some of the mental midget remarks here about whistleblower fines being a government tax, it’s worthwhile to remember that the defect in question is the nasty engine Hyundai has installed on Sonatas and CUVS plus Kias since 2010 — the GDI 2.4l piece of nonsense known as the Theta II. It eats rod bearings primarily because “someone” didn’t clean out the crankshaft drillings properly, and oil to the bearings is impeded and/or bits of swarf emerge and ruin the bearings. Either way, the engine, she is toast.

    There have been at least three official recalls half-heartedly implemented by Hyundai since about 2013 on this engine, and they have done everything to try to blame it on the customer. Since it’s semi-random, many or most customers never experience the problem, just a solid minority and they’ve been kind of screwed over in many instances. Lots of complaints to find by Goofball search. Pages of distress.

    I’m surprised this whistleblower guy Kim Gwang-ho hasn’t been assassinated as a traitor by his countrymen. He needs the money to protect himself. That engine defect has caused engine fires when the rods go through the block and spray oil about. Along with water leakage fires on Elantra class vehicles, both documented on Canadian TV, the lack of fundamental quality is what has kept me from buying H-K vehicles. Sure, most of the time they’re fine, but I really don’t want to be the sucker left holding the joker. It took a friend a year to get a new warranty muffler on his Sonata, even though it was obvious the guts had come loose. The noise was silly. And he works as warranty manager in another dealership owned by the same group! Took the overall bossman getting onto Hyundai to get those squeaking penny-pinchers to cough up a lousy muffler under warranty!

    Now imagine your Theta II engine has just done blowed-up, and getting Hyundai to admit anything. That’s what this whistleblower has done for the good of consumers – got the scrooges at Hyundai to actually cough up for their poor process control. 2010 to 2020 models. They say the 2021 engines are actually “fixed”. I wouldn’t bet on it.

  • avatar
    Matt Foley

    My teenage son has a 2011 Sonata with the 2.4 GDI that threw a rod at 107,000 miles. To my absolute shock and amazement, Hyundai had the local dealer install a new long block at no charge (full disclosure: I did pay to have new coolant hoses and serpentine belt installed; no sense putting new wine in old wineskins). We did not have to fight anyone over anything.

    I had more trouble getting Target to honor their advertised sale price for a child’s bicycle ($10 off!) than I had getting Hyundai to provide a new engine with installation ($5500 value).

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • Arthur Dailey: I know that it is dangerous and downright moronic but one finger steering was one of my favourite...
  • Inside Looking Out: “Why would the British join the French Revolution? ” To replace unelected King with...
  • ToolGuy: With the caveat that I know nothing about this, the first drawing doesn’t suggest...
  • Jeff S: And steer that battleship with your Pinky.
  • RHD: Top illustration: (Guy in white, on the left:) “Good thing they parked the Imperial next to an ocean...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber