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By Zoe Strozewski
Staff Writer
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A whistleblower who revealed that car manufacturers Hyundai and Kia moved too slowly to recall vehicles with critical engine issues was awarded more than $24 million by the U.S. government's road safety agency, the Associated Press reported.
More than 1 million vehicles were subject to recall for the issue, which could cause engines to freeze up or catch fire.
The National Highway Traffic Safety Administration (NHTSA) said in November of 2020 that Hyundai and Kia would have to pay $137 million to cover fines and safety improvements meant to remedy the engine issue. The announcement concluded a three-year government investigation into how the companies handled recalls of several vehicle models dating back to the 2011 model year.
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The sum paid to the whistleblower was the maximum percentage of penalties that can be given to a whistleblower under law. The NHTSA said that it was the first award it has ever given to a whistleblower, AP reported.
"Whistleblowers play a crucial role in bringing information to NHTSA about serious safety problems that are hidden from the agency," said Dr. Steven Cliff, NHTSA's deputy administrator, said in a statement. "This information is critical to public safety and we are committed to rewarding those who bring information to us."
The agency did not identify the whistleblower by name but said that the individual "provided NHTSA with information related to Hyundai and Kia's violations of the Safety Act." The two automakers "inaccurately reported crucial information to NHTSA about serious defects in the engines," the statement said.
For more reporting from the Associated Press, see below.
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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.
By law, the agency is allowed to award 30 percent of collected penalties to a whistleblower who gives significant information resulting in action that brings penalties of over $1 million.
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.
In a statement Tuesday, Hyundai said it takes safety seriously and is fostering a culture of transparency and accountability. The company said in 2019 it added a chief safety officer in North America who is responsible for enforcing high safety standards. A message was left seeking comment from Kia, which last year denied the government's allegations but said it wanted to avoid a protracted legal fight.
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.
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