Reldo has not learned who can wield the shield's power yet. Suggest to him that it is Arrav, and Reldo will tell you that this might be possible, but Zemouregal has Arrav under his control. Head east to the garden and speak to Arrav. He will say that he is unable to talk, but ask him if he would like to bring down Zemouregal. Arrav will say he is foretold to be under control forever, but will nonetheless be interested in your offer.