A former employee of Hyundai received the largest whistleblower award in automotive industry history when the National Highway Transportation Safety Administration (NHTSA) bestowed $24.3 million. This was due to a 2016 report filed by the whistleblower, who pointed out that Hyundai and subsidiary Kia failed to address defects in some models.
The safety issue involved the four-cylinder Theta II engines commonly used by the manufacturer. These power plants were prone to seizing up, which could cause permanent engine failure or, worse, a fire. The problem was due to manufacturing debris restricting oil flow to engine bearings. The fix for this design flaw was to replace the entire engine block (the main structure), which involved substantial cost.
The manufacturer initially recalled vehicles in 2015, but only those built before 2012. It then released a statement saying that the problem was resolved. Despite using the same engine, the company did not recall Kia vehicles, nor Hyundai’s manufactured 2012 and after. The manufacturer eventually announced a second recall for this issue in 2016, but the consumers were unnecessarily placed at risk. Finally, Hyundai recalled 1.6 million vehicles with the Theta II engine.
NHTSA steps in
The NHTSA took over the lawsuit against Hyundai once the whistleblower based in Korea reported it to the agency. After a three-year probe, the NHTSA ruled in November of 2021 that the automaker failed to issue a timely recall for a known defect. It fined the manufacturer $81 million in penalties and required it to make safety improvements to its manufacturing.
The $24.3 million to the whistleblower resulted from 2015’s Motor Vehicle Safety Whistleblower Act passed by Congress. Under this act, whistleblowers can receive up to 30% of any penalties over $1 million. Since the award, the whistleblower announced plans to help others speak up.