I am experiencing the same problem after a 14.04 -> 16.04 update:
'apt update' fails with ".. Could not execute 'apt-key' to verify signature (is 
gnupg installed?)"
but chattring /tmp +a (to keep the files) and executing the same apt-key 
commands gotten from 'apt-get -o "Debug::Acquire::gpgv=true" update' (albeit 
with --status-fd pointing to /dev/stderr) works!
Right now my system is totally unable to update !

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https://bugs.launchpad.net/bugs/1577926

Title:
  apt-key works fine, yet apt fails with "Could not execute 'apt-key'"

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