Talk to Sharel in your village in the Northern Narlmarches and he'll beg you to speak to Hassuf to prove his innocence.
Once you’ve claimed the Northern Narlmarches and founded a village there, pay your new village a visit and you’ll find a half-elf named Sharel being accosted by your guards. Apparently Sharel is being accused of thievery, and despite Sharel’s claims of innocence, there’s no immediate opportunity to pardon him. Sharel does say that Hassuf can vouch for his innocence, however, requiring you to return to your capital and speak with the merchant.
You’ll find Hassuf in his usual place at your capital; in the centre of the main square with the other merchants. Speak with him and select the dialogue option “The guards were told that a half-elf named Sharel robbed you. Is this true?”. Hassuf will respond by assuring you that Sharel did no such thing. Instead, it turns out that Sharel borrowed some money from Hassuf to open a new shop.
Once Hassuf provides you with the documents as proof of Sharel’s innocence, the journal won’t automatically update. However, you can now return to Sharel at your settlement in the North Narlmarches to prove his innocence. Select the dialogue option according to your alignment to earn 600 Experience and free Sharel from his bonds. Listen to Sharel as he thanks you profusely and take note of his intention to open a shop.
(1 of 2) You'll find Hassuf with the other merchants in the main square of your capital.
You'll find Hassuf with the other merchants in the main square of your capital. (left), Be sure to build Sharel's Sewing Shop after securing his freedom. (right)
With the quest complete, you can now manage your new village and purchase Sharel’s Sewing Shop. Be sure to return to the village after 10 days have passed to see how business is going and inspect the wares.
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