Whistleblower secures $ 24 million in Hyundai-Kia engine recall case

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DETROIT (AP) – The US government’s highway safety agency paid more than $ 24 million to a whistleblower who reported that Hyundai and Kia acted too slowly to recall more than a million vehicles whose engines could freeze or catch fire.

The National Highway Traffic Safety Administration says the award is the first it has given to a whistleblower. It is also the maximum percentage allowed by law of penalties paid by Korean car manufacturers.

In November 2020, the agency announced that Hyundai and Kia would pay $ 137 million in fines and for safety upgrades as part of a deal to fix the engine issues. The announcement resolved a three-year government investigation into corporate behavior involving recalls of several models since the 2011 model year.

Hyundai had to pay $ 54 million in civil penalties and invest $ 40 million to improve security operations. Kia, which is affiliated with Hyundai, had to pay $ 27 million in penalties and invest $ 16 million in safety performance measures. The penalties for the two automakers totaled $ 81 million.

The agency did not identify the whistleblower in a statement Tuesday announcing the payment. The statement said the automakers “inaccurately communicated crucial information to NHTSA regarding serious engine faults.”

By law, the agency is authorized to award 30% of fines collected to a whistleblower who gives important information leading to action resulting in fines of more than $ 1 million.

“This information is essential to public safety, and we are committed to rewarding those who provide us with information,” NHTSA deputy administrator Steven Cliff said in the statement. The agency is drafting regulations for its whistleblower program, but is authorized to issue awards before the rules are final, the statement said.

The U.S. security agency opened its investigation in 2017 after Hyundai recalled about 470,000 vehicles in September 2015 because manufacturing debris could restrict the flow of oil to the connecting rod bearings. This could cause bearing wear and failure, which could cause the “Theta II” four cylinder engines to stall or fire. The repair was an expensive replacement of the engine block.

The NHTSA said in investigative documents that Hyundai limited the recall to engines manufactured before April 2012, saying it fixed the manufacturing issue after that. Additionally, Kia could not recall its cars and SUVs with the same 2.4-liter, 2.0-liter “Theta II” engines, claiming that they were made on a different assembly line at a factory in Alabama.

But 18 months after the 2015 recall, the two automakers announced the recall of an additional 1.2 million vehicles for the same issue, including models that the automakers said were originally unaffected. NHTSA said when the investigation was initiated.

In a statement on Tuesday, Hyundai said it takes safety seriously and promotes a culture of transparency and accountability. The company said in 2019 it added a security official in North America, responsible for enforcing high security standards. A message was left soliciting comment from Kia, who last year denied the government’s claims but said it wanted to avoid a protracted legal battle.

Engine failures and fire problems with Hyundai and Kias have plagued businesses for more than five years, affecting owners of more than 8 million vehicles.


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