For Kim Gwang-ho, it has been 1,700 days since he first told U.S. regulators that his then-employer, Hyundai Motor Co. , was failing to address a design flaw linked to engines seizing up and at times catching fire.
Mr. Kim, a former safety engineer at the Korean auto maker, said the days he has counted will be worth it if he receives a reward he believes he is entitled to as part of a whistleblower program Congress ordered the National Highway Traffic Safety Administration to create in 2015.
The problem: The agency never set up the program.
After going public with his concerns, Mr. Kim lost his job, was sued by Hyundai for allegedly leaking business secrets and had his house outside Seoul searched by police. Now, Mr. Kim said he is unsure when or if he will be compensated for the role he says he played in an investigation that led to a record settlement NHTSA reached with the auto maker and sister company Kia Corp. last year for up to $210 million.
�I have hope that all these pains and all these hard days will be finally rewarded,� Mr. Kim, 59, said in an interview, through an interpreter.
Mr. Kim�s lawyers said they believe his payout would be at least $13.7 million, based on the formula laid out by the law, and potentially more were the companies to pay deferred penalties.
The delay of the program has frustrated both lawmakers who sponsored the original bill as well as auto-safety advocates, who say the regulatory agency has delayed implementing a powerful tool to protect people from potentially fatal vehicle defects.
Hyundai says it is working with the National Highway Traffic Safety Administration and implementing new safety processes.
A spokeswoman for NHTSA declined to comment on why the agency hasn�t yet established the whistleblower program, inaction that spanned both the Obama and Trump presidencies. She said the new administration has made the program a priority and is working on making rules for it. Meanwhile, the agency can still protect and reward whistleblowers under the 2015 law without the rules in place, she said.
To date, it hasn�t paid out any whistleblower rewards, but it has received tips and claims, she said.
The agency spokeswoman declined to comment on Mr. Kim specifically, including whether he is eligible for a reward.
Last fall, NHTSA, the top U.S. auto safety regulator, said it had found that Hyundai and Kia had delayed recalling vehicles with defective engines and provided investigators with inaccurate information about the problems. The auto makers agreed to pay $81 million in fines and potentially another $73 million and agreed to spend $56 million more on new safety procedures.
Hyundai and Kia, in their settlement with U.S. regulators, said they disagreed with the agency�s assertions and settled to resolve the issue administratively. A company spokeswoman said Hyundai is working with NHTSA and complying with the settlement terms, including implementing new safety processes.
She declined to comment on Mr. Kim�s claims regarding the company�s handling of the engine problems and his accusations that it retaliated against him.
After several high-profile scandals involving car companies� failures to disclose defects, Congress passed the law ordering NHTSA to create a program to entice company insiders to report auto safety problems. It was meant to emulate one established by the Securities and Exchange Commission in 2011 that has paid approximately $760 million to whistleblowers for reporting securities-law violations.
The law required NHTSA to establish the program�s rules by June 2017. Under both programs, whistleblowers are eligible to receive 10% to 30% of the penalties collected from a successful investigation.
A federal agenda from last fall shows NHTSA had planned to begin the public rule-making process last month. A similar notice has been published twice a year since 2017. NHTSA�s website doesn�t mention the whistleblower program.
This stalling and stonewalling is absolutely inexcusable,� Sen. Richard Blumenthal (D., Conn.), a co-sponsor of the bill mandating the program, said in an interview.
Kim Gwang-ho, at home in Yongin, South Korea, eventually took an early retirement from Hyundai.
In March, he and another lawmaker sent a letter to Transportation Secretary Pete Buttigieg asking why rules haven�t been issued. A spokesman for the secretary said the administration has made the program a priority.
Sean McKessy, who oversaw the initial five years of the SEC whistleblower program, said clear guidelines were essential to starting it. �Otherwise, it�s just pages of statutes that can�t really get any legs under it,� said Mr. McKessy, now at whistleblower law firm Phillips & Cohen LLP.
Mr. Kim said he learned about the U.S. whistleblower law through company-provided training at Hyundai and that inspired him to come forward.
According to Mr. Kim, he was part of a team at Hyundai responsible for quality problems. Mr. Kim said his group uncovered design flaws on the company�s Theta II line of engines that he claims made them prone to serious failures.
These engines were in millions of Hyundai and Kia vehicles sold world-wide, according to company filings.
Mr. Kim said the quality division first categorized the engine failures as a high-importance safety matter in 2014. By the following June, NHTSA, which had been receiving complaints through its public database, asked Hyundai executives about the engines, documents submitted to the agency show. Company executives said they didn�t consider the failures to be a safety issue, the documents show.
The following month, Mr. Kim�s team recommended to its superiors the company recall all vehicles with the engines, he said.
Hyundai recalled some vehicles with the engines in question in September 2015. The company blamed the problem on a manufacturing process that had since been changed rather than on a design defect, according to the documents.
Mr. Kim said he felt the action was insufficient and misrepresented the scope of the problem. He said he reported his concerns to internal auditors at Hyundai and agonized over whether to go to NHTSA.
In August 2016, he flew from Seoul to Washington, D.C., and brought his daughter along to translate as he met with NHTSA investigators, he said.
Mr. Kim said he also later shared his concerns with regulators and news organizations in Korea, hoping to protect himself from retaliation.
In late October of that year, he said, Hyundai brought him before a disciplinary committee and accused him of breaching confidentiality agreements, leaking company business secrets and defaming his employer.
On Nov. 2 that year, he was fired.
Hyundai filed a criminal complaint against him weeks later, alleging he leaked business secrets and violated the company�s trust.
Kim Gwang-ho was given a plaque by a South Korean civil group in 2017 for his anticorruption work.
PHOTO: JEAN CHUNG FOR THE WALL STREET JOURNAL
The following February, Korean police executed a search warrant on his home in connection with Hyundai�s complaint, he said and police documents show.
The next month, the Korean Anti-Corruption and Civil Rights Commission found Hyundai had wrongly dismissed Mr. Kim for whistleblowing and ordered him reinstated. Hyundai soon settled with Mr. Kim, who left the company with a lump-sum early retirement payment, he said. The criminal complaint against him was dismissed.
Meanwhile, Hyundai�s problems with the Theta II engines were growing costlier.
The auto-making group recalled another 1.2 million vehicles for the issue in 2017, and NHTSA opened an investigation into the company�s handling of the recalls soon after.
Hyundai and Kia settled a class-action lawsuit from owners in 2019, agreeing to cover nearly 4.2 million Theta II engines with lifetime warranties. The companies set aside roughly $760 million for the settlement and related warranty costs, according to company filings. Last October, the car makers set aside another $2.5 billion for the engine problems.
Mr. Kim�s lawyers at Constantine Cannon LLP, a firm specializing in whistleblower cases, said they have asked NHTSA to determine Mr. Kim�s possible reward now that the agency�s penalties have been announced.
They don�t know how or when the request will be evaluated without rules, they said. Says Mr. Kim: �If there�s a beginning, there must be an end.�
