One of the most controversial and scrutinized corporate deals in the recent history of South Korea is heading into overtime, inspiring the need to look back on the capability of financial and judiciary officials here.
  

The second round of hearing for a multi-billion-dollar case between the U.S. private equity firm Lone Star and the South Korean government began in Washington, D.C. on Monday. 
  

The $5 billion suit is an epilogue to a decade-long legal dispute that has raised concerns about the insufficient work of South Korean prosecutors and financial officials, as well as poorly-executed investigations and court trials.
  

The legal battle dates back to 2003 when Lone Star purchased a 51 percent stake in financially troubled Korea Exchange Bank for 1.38 trillion won at a below-market price.
  

The deal followed the 1997 Asian financial crisis that hit the nation, after which the South Korean government encouraged private equity funds to take stakes in some of the country's troubled banks.
  

Lone Star allegedly lobbied ranking officials, including Byeon Yang-ho, a former head of the Finance Ministry's finance policy-making bureau, to manipulate the Bank for International Settlements capital adequacy ratio. 
  

KEB's BIS capital adequacy ratio stood at well over eight percent as of the end of 2003, far higher than the 6.16 percent estimated by KEB at the time. The BIS ratio is a critical measurement in determining the financial position of banks. A financial institution with a capital adequacy ratio of eight percent or more cannot be classified as a financially troubled company.
  

In 2012, Lone Star sold KEB to Hana Financial Group Inc., South Korea's third-largest bank by assets, for an extremely high profit margin of 4.7 trillion won.
  

Following controversies, the prosecution declared an all-out war and promised to launch a thorough investigation into both Lone Star executives and high ranking government officials allegedly involved in the suspicious deal.
  

The Supreme Court in 2010, however, acquitted Byeon and the bank's then chief Lee Kang-won and vice president Lee Dal-yong of charges that they had conspired with Lone Star to reduce the selling price of the debt-laden bank.
  

Also, the prosecution could not actively probe Lone Star executives such as General Counsel Michael Thomson and Steven Lee, former head of the company's Seoul office, as witnesses in the case.
  

The two American citizens refused to come to South Korea to testify. Thomson has repeatedly refused to comply with a summons by Seoul's prosecution and Lee fled to the U.S. amid the investigation.
  

The former head, Yoo Hoe-won, also known as Paul Yoo, was also released on bail despite being convicted of manipulating stock prices of the credit card unit at KEB.
  

Throughout the legal battles, many raised questions that a number of ranking officials had overlooked or even helped Lone Star with the illegal act and that nobody actually took responsibility over the shady deal.
  

The officials have since climbed up to one of the highest posts at various government departments.
  

Lone Star is demanding South Korea pay it nearly $4.68 billion, claiming it was forced to pay unfair taxes and suffered losses due to Seoul's delay in approving the profitable deal. It represents the first investor-state dispute filed against South Korea's government.
  

The second round of arbitration continues for the next nine days. (Yonhap)