Whistleblower paid $24 million for reporting Kia and Hyundai moved too slowly on vehicle recalls
DETROIT - 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 of over 1 million vehicles with engines that could freeze up or catch fire.
The National Highway Traffic Safety Administration says the award is the first it has paid to a whistleblower. It’s also the maximum percentage allowed by law of penalties paid by the Korean automakers.
In November of 2020, the agency announced that Hyundai and Kia would pay $137 million in fines and for safety improvements in an agreement to fix the engine problems. The announcement resolved a three-year government probe into the companies’ behavior involving recalls of multiple models since the 2011 model year.
Hyundai had to pay $54 million in civil penalties and invest $40 million to improve safety operations. Kia, which is affiliated with Hyundai, had to pay $27 million in penalties and invest $16 million on safety performance measures. The penalties from both automakers totaled $81 million.
The agency didn’t identify the whistleblower in a statement Tuesday announcing the payment. The statement said the automakers "inaccurately reported crucial information to NHTSA about serious defects in the engines."
By law, the agency is allowed to award 30% of collected penalties to a whistleblower who gives significant information resulting in action that brings penalties of over $1 million.
"This information is critical to public safety, and we are committed to rewarding those who bring information to us," Deputy NHTSA Administrator Steven Cliff said in the statement. The agency is in the process of drafting regulations for its whistleblower program but is allowed to make awards before the rules are final, the statement said.
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 "Theta II" 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.
Hyundai said last year that it would work with NHTSA to identify and address safety issues. Kia denied the allegations but said it wanted to avoid a protracted legal fight. Messages were left Tuesday seeking comment on the whistleblower award.
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.