US Regulators Award Hyundai-Kia Whistleblower $24M in Engine Recall Case

The National Highway Traffic Safety Administration says the award is the first it has paid to a whistleblower

Jung Yeon-Je | AFP | Getty Images

The U.S. government’s road safety agency has paid more than $24 million to a whistleblower who reported that Hyundai and Kia moved too slowly to recall over 1 million vehicles with engine problems.

The National Highway Traffic Safety Administration says the award to ex-Hyundai Motor engineer Kim Gwang-ho is the first it has paid to a whistleblower. It’s also the maximum percentage allowed under a new federal program that entitles employees who report fraud to receive up to 30% of penalties paid by the automakers.

In November 2020, Hyundai and Kia agreed to pay $137 million in fines and for safety improvements to resolve the engine problems.

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. The agency found that Hyundai and its Kia subsidiary had delayed recalling the vehicles, and that the Korean automaker had provided inaccurate information about the problems.

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

The U.S. safety agency opened its probe in 2017 after Hyundai recalled about 470,000 vehicles in September of 2015 because debris from manufacturing could restrict oil flow to connecting rod bearings. That could make the bearings wear out and fail, potentially causing the four-cylinder engines to stall or catch fire. The repair was an expensive engine block replacement.

NHTSA said in investigation documents that Hyundai limited the recall to engines made before April of 2012, saying it solved the manufacturing problem after that. In addition, Kia didn’t recall its cars and SUVs with the same 2.4-liter and 2-liter “Theta II” engines, contending they were made on a different assembly line at a plant in Alabama.

But 18 months after the 2015 recall, both automakers announced recalls of 1.2 million more vehicles for the same problem, including models the automakers originally said weren’t affected, NHTSA said when it opened the investigation.

Engine failure and fire problems with Hyundais and Kias have plagued the companies for more than five years, affecting the owners of more than 8 million vehicles.

In June of 2018, NHTSA opened two more investigations of the automakers that have yet to be resolved. The agency said it had owner complaints of more than 3,100 fires, 103 injuries and one death. It granted a petition seeking the probes filed by the nonprofit Center for Auto Safety, a consumer advocacy group.

Jason Levine, executive director of the center, said they petitioned NHTSA seeking an investigation because no one seemed to be listening to complaints from Hyundai and Kia owners.

The new investigations, one for Hyundai and the other for Kia, covered non-crash fires in almost 3 million vehicles across the model lineups of the affiliated Korean automakers.

In documents, NHTSA reported that it had received complaints of engine compartment fires, as well as fires involving other components including tail light housings, wiring harnesses, and light bulbs.

Later the affiliated Korean automakers acknowledged that the engine block replacements may not have been properly done in all cases by dealers. Kia said a pipe carrying high-pressure fuel may have been damaged, misaligned or improperly tightened during the repairs, allowing gas to leak and hit hot engine parts, causing more fires.

Hyundai and Kia are recalling more than 500,000 cars over concerns of engine fires.

More recalls followed. Hyundai and Kia have recalled more than 4.7 million vehicles, and they did a “product improvement campaign” covering another 3.7 million to install software that will alert drivers of possible engine failures.

Data collected by the Center for Auto Safety show 31 U.S. fire and engine-related recalls from Hyundai and Kia since 2015. The recalls involve more than 20 models from the 2006 through 2021 model years totaling over 8.4 million vehicles.

In some cases, such as nearly 200,000 vehicles recalled in September for braking system electrical shorts, the automakers urged owners to park them outside because fires could start after the vehicles were turned off. There also were recalls for brake fluid leaks, fuel pump cracks, damaged catalytic converters and problems with fuel igniting prematurely in the cylinders, all of which could set engines ablaze.

Kim, who is based in Seoul, South Korea, said in a statement he hopes that his reporting leads to "real safety improvements, both at Hyundai and throughout the industry."

“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.” Mr. Kim said.

Copyright AP - Associated Press
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