Looks like you've caught a bounty. Is he dead? You only get paid half for that.
Police Chiefs are the security chiefs of the United Cities, Empire Peasants, and the Free Traders. They can be easily found inside of Police Stations, and can be asked about bounty notices, offering bails, and reselling confiscated items.
Despite the loosening of the United Cities' grip on the southern territories after certain World States are achieved, they still seem to assume the role of law enforcement in the cities. This may be due to the lack of Rebel Swordsmen presence in the south, leaving security to be handled by the Police and adventurers.
Most of their dialogue is locked once the player has allied with the Anti-Slavers (with the exception of the King Gurgler bounty).
This character can colour armour and clothing due to a colour scheme attached.