Michael knew Fredo was the traitor in the family in Havana, and during the chaos of the astro takeover it seems it would have been relatively easy to knock him off and come back with a plausable story that "poor Fredo" died when the rebels were rioting. Mama would have grieved, but he was a woman of great religious faith who'd already lost one son, and she would have survived well enough. This would make it impossible to pin on Michael in the future.

Unless of course Michael wanted to keep him around just in case Fredo had information about a certain senate counselthat would be useful if Michael were ever investigated.