I've murderised him several different ways. The traditional way, shoving them into the nearby pit, exploding them with barrels and a very long distance shot, and the classing 'beat the snot out of him while he's magically held'. All three times with no witnesses (I blew up the audience with some of those aforementioned barrels), and unlike Minthara the goblins turn hostile when they die. Hell, I botched the barrel blasting with Minthara and despite surviving she's still remained friendly so long as she didn't see where the burning arrow came from.
I assume it's hard coded to set the goblins to hostile when the bugbear dies, which is very annoying when no-one should even be aware he's dead, much less who did it. Assuming I didn't miss an in game explanation.
