i had the same error
while chroot-ing from arch linux into ubuntu linux.

fixed the issue with:
source /etc/environment

... to set the correct $PATH

and maybe:
echo 'APT::Sandbox::User "root";' >/etc/apt/apt.conf.d/00temp

... as suggested earlier

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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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