The Story Behind Former Manager Kim Gwang-ho's 28.5 Billion Won US Reward for Reporting Hyundai Motor Company Engine Defects

It has been revealed that former quality team manager Kim Gwang-ho, who reported the concealment of Theta II engine defects by Hyundai Motor Company to US authorities, received a reward of approximately 28.5 billion won ($24.3 million) from the US government. This is the first compensation case determined under the US 'Whistleblower Act' enacted in 2015.

Whistleblowing against defect concealment, the price of dismissal and criminal prosecution

According to a video from the YouTube channel 'Understanding: All the Knowledge in the World', former manager Kim Gwang-ho recognized the engine defect issue while working at Hyundai Motor Company and reported it to the company's internal audit office. However, when no effective measures were taken by the company, he decided to file a public interest report in the United States. At that time, the Whistleblower Act had been enacted in the United States and was about to be implemented, and the bill included provisions to pay 10–30% of the fines paid by an organization to the whistleblower as a reward.

Kim had to make immense personal sacrifices during the reporting process. According to the explanation from the participant in the video, he was dismissed by the company after the report and was even criminally prosecuted on charges of breach of trust and leakage of trade secrets. He stated, "As an engineer, I judged it to be an opportunity to correct the problem for consumers," and revealed that he made the strategic choice to utilize the US system after contemplating the effectiveness of the domestic public interest whistleblower protection system at the time.

232,000,000,000 won fine settlement and the 'tax' controversy over the reward

Based on Kim's report, the NHTSA launched an investigation, and as a result, in 2020, Hyundai Motor Company and Kia agreed to pay a total fine of $210 million (approximately 232,000,000,000 won) to the US government for their responsibility regarding delayed recalls. This settlement was sophisticatedly structured through methods such as cash payments, investment in quality facilities, and suspended sentences. In this process, Kim received a reward of $24.3 million as the first case determined by law.

Currently, this case is leading to a legal battle surrounding the nature of the reward. The National Tax Service decided to tax the money Kim received, judging it to be a taxable 'reward,' but Kim is claiming it is a tax-free 'prize' received from a foreign government. In the tax tribunal and the first instance of the administrative lawsuit, the National Tax Service's decision has already been upheld, and Kim plans to contest this again through a future appeal. The result of this ruling is expected to serve as an important precedent for the tax issues of other public interest whistleblowers that may occur in the future.