Is it a prophecy? The Grubbs believe that misfortune will strike those who stop the river's flow, but I don't think there's any indication that their identifying the Oktigi came before Sekto moved in. I'd always thought that they were telling the story, but Clakkers just thought they were superstitious, and found logical explanations for their ܘbeliefs’ (as Eugene does).
On a related issue, it's always bugged me that Eugene describes an Octigi as a Grubb demon - are they poorly versed in the industrial races of Oddworld, or is Octigi just the Grubb name for Sekto's species. I doubt that, but how would they know his species?