you are saying they read everyone's PM's?
I am betting a PM was sent to a wrong person, and they whined or copied it to a mod. I can not see them checking pm's on a regular basis.
There is no way for anyone to read a PM other than the person it is sent to. The same goes for your passwords - administrators can change them to a new one if a user needs it, but they can never see the password that a user has chosen.