They meant that he fucked up by making the giants scholars instead of warriors.
Does not necessarily mean he worked with WG.
There's also sommers asking sham if they were here to visit Harold's grave.
That's not something you do for people you don't know or your enemies. That's something you do for your allies.
And the way he said it this chapter feels like he's admonishing harold for not doing a better job. Meaning harold was tasked with it.
I think, Harold was a traitor at first. But, sometime before he actually died, he came to his senses. And he understood that if the wg get the warrior nation version of elbaf, its game over for the rest of the world. So he basically mandated elbaf to become more peaceful and tried to make the next generation passive. All the while still keeping his cover as a wg agent. But, imu somehow learned of his betrayal and did something to him to make him go berserk.
Which is when Loki comes in. Harold with his last semblance of sanity, asked Loki to kill him. Loki did that. But Jarul, who was supposed to prove Loki's innocence, got stabbed in the head and lost his memories. When he came to, he saw Loki standing over Harold's body, and Loki basically became the father killer.
This way, Harold gets redeemed, Loki is good guy, and Jarul is also good.
Classic oda style story telling.