The Guard Commander at the entrance will give you instructions:-
First is a book of Contraband, to be found on the Table in the first small round room, Take it back to Commander for further instructions.
Then you must collect the 4 contraband items listed in the book which will be on random smuggler corpses
Then you will be requested to kill the smuggler chief found in upper left room, he has a mage and warrior guards outside his door (they are tough).
There is a second book in the area reached by hidden teleport (A Barrel) as well as a Treasure Chest.