The legend I heard behind the song was different from, though similar to, the one Professor Pi mentions.
The way I heard it, it all starts many years ago. Phil Collins and his wife were out in New York, when they get mugged. After taking their money, the gang then proceeds to rape his wife while forcing him to watch.
Flash foward about five years. Collins and his wife are out canoeing on a river (I don't know which; accounts vary) when a thunderstorm comes rolling in. They manage to get to a safe spot on the banks to wait it out. Then, they see someone out in the river nearby, and toss him a line to help him out. Once they get him onto shore, though, they recognize him as one of the gang who had attacked them.
So they threw him back in the swollen river, where he (presumably) died. Think about this in light of the lyrics:
When you told me you were drowning, I would not lend a hand...
But I was there and I saw what you did...
But I know the reason why you're keeping silent, son...
The hurt doesn't show, but the pain still grows...
There are also two versions of this song on the radio. The more recent version is most easily identified by the horn section in the refrain. But at both the beginning and the end of this version, there's an interesting little riff on some kind of percussion instrument, which sounds almost suggestive of rushing water.
Consider all these in light of the story, and the song takes on a whole new —and, to be honest, rather disturbing— meaning.