I think it was directoral license. Neri probably had to report to the police that Fredo "fell overboard," and that he tried and failed to rescue Fredo. He had to dump Fredo's body in a place remote enough that the police wouldn't find it when he and/or Michael called to report the "accident." And, if Michael heard the gunshot, so would everyone else in the compound.
Maybe the police weren't even notified? After all, if they made the excuse of "drowning", then there had to have been a body that police could have fished out. So I'm not really sure they were even called...
