Sometime on the second disc, when the Shinra higher-ups realize he's helping Cloud and co.
By remote control, naturally.
The same way everything else in FF works: MAGIC!
With the "control Cait Sith" materia, duh!
An elaborate contraption made of rubber bands, paperclips and duct tape.
Actually, you see, Cait Sith controls HIM.
Oh, he just has an affinity for plush toys you see....