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.
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.