Hyundai whistle-blower, in rarity for South Korea, prompts recall

Jeyup S. Kwaak
Kim Gwang-ho speaks as he checks his Hyundai Motors car during an interview with Reuters in Yongin, South Korea, April 19, 2017.
Kim Hong-Ji | Reuters

Kim Gwang-ho, an automotive engineer, did something last year that many South Koreans saw as an act of betrayal: He became a whistle-blower.

Mr. Kim was then a 25-year veteran of Hyundai Motor Group, one of South Korea's most successful companies and an icon of its industrial might. But he believed Hyundai was hiding dangerous defects from the public and the authorities, and he sent a batch of internal Hyundai documents to officials in South Korea and the United States to prove his allegations.

"If someone higher-ranked than you says you do it, you do it, no questions asked," Mr. Kim, 55, said in an April interview, echoing critics who say South Korea suffers from a rigid hierarchical corporate culture. His eyes showed signs of fatigue that he attributed to months of publicly clashing with Hyundai. "If you talk back to a boss frankly, you'll get fired," he said.

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Hyundai, which fired Mr. Kim, disputes his allegations. But on Friday, the government ordered Hyundai to recall 240,000 vehicles in South Korea and said that it would refer accusations that it hid defects to prosecutors. The government cited manufacturing issues brought to its attention by an insider it did not identify, but Hyundai, government officials, the local news media and Mr. Kim have all said that he is that insider.

The decision marks a big victory for whistle-blowers in a country that has long considered them traitors to their colleagues, their employers and even their country. Critics of South Korea's corporate culture have for years pushed for better legal protection for insiders who call out problems or wrongdoing.

"The Hyundai case could be a trigger for more systematic support for whistle-blowers, given the high level of public interest," said Lee Young-kee, a lawyer who heads the Horuragi Foundation, a civic group that seeks greater whistle-blower protections. "This is a rare opportunity."

South Korea is in the midst of a broad rethinking of its relationship with powerful businesses. The vice chairman of Samsung, South Korea's biggest company, is being tried on bribery and other charges related to a political scandal that led to the ouster of the country's previous president. Her successor, President Moon Jae-in, has vowed to crack down on South Korea's biggest businesses, which many people say stifle innovation and breed corruption. Still, big changes are not likely anytime soon, experts say, citing political obstacles and the potential for backtracking if the economy slows.

South Korea's companies can also fight back. Hyundai has said it will comply with the recall order but disputes that it hid any problems or that Mr. Kim had evidence of wrongdoing.

"The issues raised were being monitored before his request was made, as part of our stringent internal procedures," it said in a statement.

South Korea is known for a strict hierarchy in the workplace, stemming from past military rule as well as mandatory military service of about two years for all able-bodied men. Those who find positions through family, school or hometown connections are often well taken care of, but critics say the culture discourages independent voices.

For a whistle-blower here, coming out of the shadows can be an ordeal. In a 2013 survey of 42 whistle-blowers by the Horuragi Foundation, 60 percent said they were fired after exposing organizational corruption. Whistle-blowers also said they experienced financial hardship and ostracism from colleagues.

On Friday, the Transport Ministry ordered a recall affecting 12 popular Hyundai models under both its Hyundai and Kia brands, including sedans such as the Elantra and the Sonata as well as the Santa Fe, a sport utility vehicle. The ministry added that it asked prosecutors to investigate whether the carmakers hid five defects related to the recall from the public, including damaged vacuum pipes and excessive ventilation resistance in fuel vapor canisters.

The 240,000 vehicles recalled — all in South Korea — add to another 1.4 million Hyundai offered to fix last month in South Korea and the United States. A spokeswoman for the National Highway Traffic Safety Administration in the United States said in an email that the agency "is reviewing and will take appropriate action as warranted" but declined to comment further. An N.H.T.S.A. investigator working on the case declined to comment. Hyundai has said there were no deaths or injuries related to the recalled vehicles.

The battle between Hyundai and Mr. Kim unfolded over several months in the South Korean news media. Mr. Kim shared his allegations everywhere he could, uploading parts of the documents on online forums and providing them to the local news media.

"Engineers are like that," Mr. Kim said. "We don't lie."

Hyundai filed for a court injunction against him in October to stop him from exposing internal documents, saying he breached a written oath of confidentiality. That same month, Hyundai sued him for breach of trust, leading to a criminal investigation by the police.

Mr. Kim joined Hyundai in 1991 at age 29 and had few complaints about the company until about two years ago.

According to Mr. Kim, he was in a meeting in July 2015 where his colleagues suggested playing down just-discovered design flaws to an engine model to reduce repair costs. Fearing he would be considered an accomplice, Mr. Kim alerted company auditors about the meeting and requested an internal transfer, which was granted.

But after a year, he saw no action had been taken against the meeting's participants or to fix the problems, and so he took matters in his own hands.

In November, a court in Seoul, the South Korean capital, ruled that his online activities and news media access exceeded the legal definition of whistle-blowing. The judges also ruled that the documents in his possession were not conclusive, saying the findings were "likely to be updated continuously." Hyundai fired Mr. Kim that same month.

But in March, South Korea's Anti-Corruption and Civil Rights Commission ruled that he should get his job back. Mr. Kim returned to Hyundai last month, but the carmaker had been challenging the commission's decision with an administrative court. On Tuesday, the two sides appeared to reach a deal, with Mr. Kim resigning from Hyundai and the company withdrawing both the lawsuits and the complaint to the police, a Hyundai spokeswoman said.

"I had a good life when I worked there, with good salary and benefits," Mr. Kim said.

He added that, for others, "to fight against a big business, in Korean culture, I wouldn't bet on that happening again soon."