What should the friend do with the money he took from five people whom he was going to take to Europe via Greece, and who drowned in the water on the Turkish-Greek border?

If the deal between your friend and these individuals was based on smuggling them through illicit means, then the contract is void, and the collected payment is unlawful (haram), and must be returned to their heirs or given in charity on their behalf. However, if the agreement was to transport them through lawful means and they died before benefiting from the service, then he may take an amount proportionate to the benefit they received and return the rest to their heirs, or give it in charity on their behalf if reaching them is impossible. If they did not receive any benefit, then he must return all the money or give it in charity.