Is Garachen exploiting the refugee crisis, or is he only getting fair compensation for offering a service that he is not legally obliged to?
Speak to Garachen at 28 outside of the Ducal Palace.
You can compliment him on the seemingly charitable service he's providing for the refugees. Somebody named Perren, who's right close by, will chime in that Garachen is taking advantage of the refugees by taking all of their valuables for himself.
You can try to call out Garachen for taking advantage of the refugees. Garachen will then suggest that you speak with Lady Alyth Elendara in the Elfsong Tavern and obtain supplies for him.
Calling him out and getting from him the request to obtain supplies is the only way to open up different possibilities for further action on your part. Dismissing the refugees as beneath your concern or other similar options will not open up the possibility to take matters further. But you can always speak to Garachen again if you decide that you do want to do something about him taking advantage of the refugees.
Travel to the Elfsong Tavern. You'll arrive at 1 just outside of it. Enter it through the door at 3.
Lady Alyth Elendara will wander at random about the main floor. Trying to negotiate a lowering of her price or providing a charitable donation will go nowhere. You'll have to shell out 1,000gp for her to give you the Supply Chest Key. You could also pickpocket it from her. There is also yet another way to get what you need if you don't want to pay the 1,000gp.
The Supplies will be in a locked chest at 14. You can either open the chest with the Supply Chest Key if you had paid Lady Alyth 1,000gp beforehand (or pickpocketed it from her), or you can have a Thief in the party unlock it.
Bring the Supplies to Garachen, and Perren will reward you with a Black Opal.
An alternative resolution starts with traveling to the Flaming Fist Headquarters. You'll arrive at 1 just outside of it. Enter it through the door at 4.
Officer Fritz will be at 6. You can speak to him and start off by complaining to him how Garachen treats the refugees. Officer Fritz will maintain that there's nothing illegal about what Garachen does, even if it is morally questionable. It is up to you whether you wish to leave it at that and leave your options for this Quest open, or whether you want to escalate the accusations into Garachen selling the refugees to slavers. Leave once you've convinced Officer Fritz to take that particular accusation seriously.
Now return and speak to Garachen again. Officer Fritz will arrive and inform Garachen that he's being taken into custody pending completion of the investigation of whether the accusations of slave trading are true. Perren and the other refugees take over Garachen's house. Completing the Quest this way leads to no rewards at all.
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